Perry is in the 33% tax bracket.During 2012, he had the following capital asset transactions: Perry's tax consequences from these gains are as follows:
A)(15% ´ $30,000) + (33% ´ $4,000).
B)(15% ´ $10,000) + (28% ´ $30,000) + (33% ´ $4,000).
C)(0% ´ $10,000) + (28% ´ $30,000) + (33% ´ $4,000).
D)(15% ´ $40,000) + (33% ´ $4,000).
E)None of the above.

Question

Perry is in the 33% tax bracket.During 2012, he had the following capital asset transactions:  Perry's tax consequences from these gains are as follows:
A)(15% ´ $30,000) + (33% ´ $4,000). 
B)(15% ´ $10,000) + (28% ´ $30,000) + (33% ´ $4,000). 
C)(0% ´ $10,000) + (28% ´ $30,000) + (33% ´ $4,000). 
D)(15% ´ $40,000) + (33% ´ $4,000). 
E)None of the above.

Quizplus · Accepted Answer

The tax consequences for each transaction are as follows:
- Sale of stock: Long-term capital gain of $10,000. Taxed at 15%.
- Sale of rental property: Long-term capital gain of $30,000. Taxed at 28%.
- Sale of personal residence: Exclusion of $250,000 ($500,000 if married) since it was the primary residence for at least 2 of the past 5 years.
- Sale of collectible: Short-term capital gain of $4,000. Taxed at 33%.

Therefore, the total tax consequences are:
(15% × $10,000) + (28% × $30,000) + (33% × $4,000) = $1,500 + $8,400 + $1,320 = $11,220

Option B is the closest to this answer.

Perry Is in the 33% Tax Bracket