In July 2020, Harriet sells a stamp from her stamp collection at a gain of $500. Harriet purchased the stamp collection in 2010. If Harriet is in the 35%marginal tax rate bracket and has no other capital asset sales in 2020, what is her tax on the sale of the stamp?Oa. $50Ob. $125Oc. $175Od. $140Oe. $75PreviousNext

There are taxes on the capital gains that is to be paid but the tax on the capital gains depends on…

July 2020, Harriet sells a stamp from her stamp collection at a gain of $500. Harriet purchased the stamp co arginal tax rate bracket and has no other capital asset sales in 2020, what is her tax on the sale of the stamp a. $50 b. $125 C. $175 d. $140 e. $75

July 2020, Harriet sells a stamp from her stamp collection at a gain of $500. Harriet purchased the stamp co arginal tax rate bracket and has no other capital asset sales in 2020, what is her tax on the sale of the stamp a. $50 b. $125 C. $175 d. $140 e. $75

Income Tax Fundamentals 2020

38th Edition

ISBN:9780357391129

Author:WHITTENBURG

Publisher:WHITTENBURG

Chapter5: Deductions For And From Agi

Section: Chapter Questions

Problem 20P

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Concept explainers

Capital Gain

Any capital asset when sold can give the seller a higher or lower price from its purchase price leading to a capital gain or capital loss. The time period of holding an asset is decided based on if it is a long term or short-term capital gain. On that basis, the rate of taxation is decided if it is 20%, 15% or according to the tax brackets. The rate of taxation differs in the case of equity or debt, whether long or short term. The capital gain can be adjusted from capital loss to arrive at a net capital gain. The amount of gains and the exemption has to be reported in the tax return filed in the financial year in which the asset was transferred. The tax return can be filed quarterly, monthly, semi-annually or annually.

Question

In July 2020, Harriet sells a stamp from her stamp collection at a gain of $500. Harriet purchased the stamp collection in 2010. If Harriet is in the 35%
marginal tax rate bracket and has no other capital asset sales in 2020, what is her tax on the sale of the stamp?
Oa. $50
Ob. $125
Oc. $175
Od. $140
Oe. $75
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