Andrew and Jennifer are in the 25% marginal tax bracket.Three years ago they purchased 100 shares of stock at $20 a share.Today they sold the 100 shares for $29 a share.What is the amount of federal income tax they owe as a result of this sale?

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Quizplus · Accepted Answer

The capital gain is ($29 - $20) * 100 = $900. Since they held the stock for more than a year, the long-term capital gains tax rate applies, which is 15% for those in the 25% tax bracket. Therefore, the tax owed is 15% of $900, which is $135.

Andrew and Jennifer Are in the 25% Marginal Tax Bracket