Table 1.4
Use the following tax rates and income brackets for 2012 to answer the following question(s).
-Andrew and Jennifer are in the 25% marginal tax bracket. Three years ago they purchased 100 shares of stock at $20 a share. In 2012, they sold the 100 shares for $29 a share. What is the amount of federal income tax they owe as a result of this sale?

Question

Table 1.4
Use the following tax rates and income brackets for 2012 to answer the following question(s). 
-Andrew and Jennifer are in the 25% marginal tax bracket. Three years ago they purchased 100 shares of stock at $20 a share. In 2012, they sold the 100 shares for $29 a share. What is the amount of federal income tax they owe as a result of this sale?

Quizplus · Accepted Answer

The capital gain is $900 (100 shares * ($29 - $20)). The long-term capital gains tax rate for those in the 25% tax bracket is 15%. Therefore, the tax owed is $900 * 15% = $135.

Table 1.4 Use the Following Tax Rates and Income Brackets for 2012