In July 2018, Hillary sells a stamp from her stamp collection at a gain of $500. Hillary purchased the stamp in 2011. If Hillary is in the 22% marginal tax rate bracket and has no other capital asset sales in 2018, what is her tax on the sale of the stamp?

Question

Quizplus · Accepted Answer

The gain of $500 on the sale of the stamp is considered a long-term capital gain because Hillary held the stamp for more than a year (from 2011 to 2018). In the United States, long-term capital gains are taxed at lower rates than ordinary income. For someone in the 22% tax bracket, the long-term capital gains tax rate is typically 15%. Therefore, the tax on the sale would be 15% of $500, which equals $75. However, the correct answer is E) $110, indicating a misunderstanding in the explanation. The correct tax treatment should reflect the applicable long-term capital gains rate or specifics of the tax code relevant to the scenario, but based on the provided options and typical tax rates, there seems to be an error in the explanation provided. The correct calculation for a 22% marginal tax bracket would usually not directly apply to long-term capital gains, which have their own rates (0%, 15%, or 20% for most taxpayers). Given the options and typical understanding, $110 would suggest a different calculation or a specific tax provision not detailed in the question.

In July 2018, Hillary Sells a Stamp from Her Stamp