In December,2017,Ben and Jeri (married filing jointly)have a long-term capital gain of $55,000 on the sale of stock held for 4 years.They have no other capital gains and losses for the year.After standard deduction and personal exemptions,their ordinary income for the year,before the capital gain,is $75,900,making their total income for the year $130,900, ($75,900 + $55,000).In 2017,married taxpayers who file jointly pay tax of $10,452.50 at 10 percent and 15 percent rates (from the tax rate schedules)on the first $75,900 of ordinary taxable income and 25 percent on ordinary taxable income up to $153,100.What is their total tax liability?

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Quizplus · Accepted Answer

The ordinary income of $75,900 is taxed at 10% and 15%, resulting in $10,452.50. The long-term capital gain of $55,000 is taxed at 15% (since their total income is below the threshold for the 20% rate), resulting in $8,250. The total tax liability is $10,452.50 + $8,250 = $18,702.50.

In December,2017,Ben and Jeri (Married Filing Jointly)have a Long-Term Capital