Table 1.2
Use the following tax rates and income brackets for 2015 to answer the following question(s).
-Michelle and Patrick are in the 28% marginal tax bracket.They bought 100 shares of DJN stock at $45 per share and sold them 4 years later in 2015 at $22 per share? By how much did their loss reduce their taxes in the year when they sold the stock?

Question

Table 1.2
Use the following tax rates and income brackets for 2015 to answer the following question(s). 
-Michelle and Patrick are in the 28% marginal tax bracket.They bought 100 shares of DJN stock at $45 per share and sold them 4 years later in 2015 at $22 per share? By how much did their loss reduce their taxes in the year when they sold the stock?

Quizplus · Accepted Answer

The loss on the sale of the stock is ($22 - $45) x 100 = -$2,300. Since Michelle and Patrick are in the 28% marginal tax bracket, their tax benefit from the loss would be 28% of the loss, which is -$644 (i.e. a reduction of their taxes by $644). Therefore, the answer is B.

Table 1.2 Use the Following Tax Rates and Income Brackets for 2015