Dunbar,a single taxpayer,purchased 300 shares of Sweetwater,Inc.,stock on October 14,2014,for $3,000.He sells the stock on August 22,2016,for $4,000.Dunbar has no other capital asset transactions in 2016.
I.If Dunbar's taxable income without considering the stock sale is $93,000,the sale of the stock will increase his income tax liability by $250.
II.If Dunbar's taxable income without considering the stock sale is $13,000,the sale of the stock will not increase his income tax liability.

Question

Dunbar,a single taxpayer,purchased 300 shares of Sweetwater,Inc.,stock on October 14,2014,for $3,000.He sells the stock on August 22,2016,for $4,000.Dunbar has no other capital asset transactions in 2016.
I.If Dunbar's taxable income without considering the stock sale is $93,000,the sale of the stock will increase his income tax liability by $250.
II.If Dunbar's taxable income without considering the stock sale is $13,000,the sale of the stock will not increase his income tax liability.
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Quizplus · Accepted Answer

For a single taxpayer, the maximum amount of capital gains that can be taxed at 0% is $38,600 in 2016. Assuming Dunbar has no other capital gains or losses, if his taxable income without considering the stock sale is $93,000, he has exceeded the $38,600 threshold and will be subject to capital gains tax on the sale. The tax liability on his $1,000 capital gain would be $150 (15% of $1,000). Therefore, statement I is incorrect.
On the other hand, if Dunbar's taxable income without considering the stock sale is $13,000, his total income is below the $38,600 threshold, and he will not be subject to any capital gains tax on the sale. Therefore, statement II is correct.

Dunbar,a Single Taxpayer,purchased 300 Shares of Sweetwater,Inc