Table 1.4
Use the following tax rates and income brackets for 2012 to answer the following question(s).
-Danielle and Jonathan are in the 28% marginal tax bracket. They bought 200 shares of DJN stock at $35 per share and sold them 4 years later in 2012 at $12 per share? How much did their loss reduce their taxes in the year when they sold the stock?
A) $0
B) $450
C) $840
D) $1,288

Question

Table 1.4
Use the following tax rates and income brackets for 2012 to answer the following question(s). 
-Danielle and Jonathan are in the 28% marginal tax bracket. They bought 200 shares of DJN stock at $35 per share and sold them 4 years later in 2012 at $12 per share? How much did their loss reduce their taxes in the year when they sold the stock?
A) $0 
B) $450 
C) $840 
D) $1,288

Quizplus · Accepted Answer

To calculate the loss, we need to find the difference between the purchase price and the selling price per share: 
Loss per share = $35 - $12 = $23 
Total loss = $23 x 200 = $4,600

Since Danielle and Jonathan are in the 28% tax bracket, their tax savings will be 28% of the loss: 
Tax savings = 28% x $4,600 = $1,288

Therefore, their loss reduced their taxes by $1,288, which is option D.

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