Sidney,a single taxpayer,has taxable income of $45,000 from all sources except capital gains.He has a long-term capital gain of $1,000.What is the actual tax savings Sidney receives because of any special treatment of his $1,000 long-term capital gain?

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Quizplus · Accepted Answer

Since the long-term capital gain is only $1,000, it falls in the 0% tax bracket for capital gains (for taxpayers with taxable income less than or equal to $40,000 in 2021). Therefore, there is no tax liability on this gain and no tax savings. However, if Sidney's total taxable income was $50,000 or higher, the long-term capital gain would be taxed at a rate of 15%, resulting in a tax savings of $150.

Sidney,a Single Taxpayer,has Taxable Income of $45,000 from All Sources