Ronald,a single taxpayer,purchased 300 shares of Jasmine Inc.,stock on October 14,2014,for $4,000.He sells the stock on August 22,2016,for $2,000.Ronald has no other capital asset transactions in 2016.
I.If Ronald's taxable income without considering the stock sale is $93,000,the sale of the stock will decrease his income tax liability by $560.
II.If Ronald's taxable income without considering the stock sale is $13,000,the sale of the stock will decrease his income tax liability by $300.

Question

Ronald,a single taxpayer,purchased 300 shares of Jasmine Inc.,stock on October 14,2014,for $4,000.He sells the stock on August 22,2016,for $2,000.Ronald has no other capital asset transactions in 2016.
I.If Ronald's taxable income without considering the stock sale is $93,000,the sale of the stock will decrease his income tax liability by $560.
II.If Ronald's taxable income without considering the stock sale is $13,000,the sale of the stock will decrease his income tax liability by $300.
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Quizplus · Accepted Answer

The sale of the stock will result in a capital loss of $2,000 ($4,000 - $2,000). For taxpayers in the 15% tax bracket, the capital loss deduction is limited to $3,000. Therefore, Ronald can deduct $3,000 of the capital loss, which will reduce his taxable income by $3,000. If Ronald's taxable income without considering the stock sale is $93,000, the sale of the stock will decrease his income tax liability by $560 ($3,000 x 15%). If Ronald's taxable income without considering the stock sale is $13,000, the sale of the stock will decrease his income tax liability by $300 ($3,000 x 10%).

Ronald,a Single Taxpayer,purchased 300 Shares of Jasmine Inc