Dwight, a single taxpayer, has taxable income of $75,000 from all sources except capital gains. He has a collectibles gain of $1,000. What is the actual tax saving Dwight receives because of any special treatment of his $1,000 collectibles gain?

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Quizplus · Accepted Answer

Collectibles gains are taxed at a maximum rate of 28%. However, if Dwight's other income places him in a tax bracket lower than 28%, the collectibles gain would be taxed at his ordinary income tax rate. Since Dwight's taxable income is $75,000, he falls within the 22% tax bracket for a single filer in the current tax year. Therefore, his $1,000 collectibles gain is taxed at the same rate as his other income, resulting in no additional tax savings.

Dwight, a Single Taxpayer, Has Taxable Income of $75,000 from All