Danielle and Jonathan are in the 28% marginal tax bracket.They bought 200 shares of DJN stock at $35 per share and sold them 4 years later at $12 per share? How much did their loss reduce their taxes in the year when they sold the stock?

Question

Quizplus · Accepted Answer

To calculate the loss, we need to subtract the selling price from the buying price:

$35 (buying price) - $12 (selling price) = $23 (loss per share)

Total loss = $23 x 200 shares = $4,600

To calculate the tax benefit, we need to multiply the loss by the tax rate:

$4,600 x 0.28 (tax rate) = $1,288

Therefore, the loss reduced their taxes by $1,288, which is option D. The other options are incorrect as they do not reflect the correct calculation for the tax benefit.

Danielle and Jonathan Are in the 28% Marginal Tax Bracket