In July 2016,Hillary sells a stamp from her stamp collection at a gain of $500.Hillary purchased the stamp in 2010.If Hillary is in the 25% marginal tax rate bracket and has no other capital asset sales in 2016,what is her tax on the sale of the stamp?

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Quizplus · Accepted Answer

The stamp is a collectible, and long-term capital gains on collectibles are taxed at a maximum rate of 28%. Since Hillary's gain is $500, her tax on the sale is 28% of $500, which is $140. However, since she is in the 25% tax bracket, her tax rate on the collectible gain is limited to her marginal rate of 25%, resulting in a tax of $125 (25% of $500).

In July 2016,Hillary Sells a Stamp from Her Stamp Collection