A student whose parents live in California, but who attends college in Florida,

Question

A student whose parents live in California, but who attends college in Florida, learns that his grandparents bought him 5,000 shares in Target Corporation stock many years ago, when the shares traded at $1. The Federal capital gains tax rate is currently 18% and the California and Florida state (income) tax rates are 8% and 0% respectively. The student then sells the shares at today's market price (look it up!). How much total tax does he pay on this stock sale if he files his taxes: a) in California; and b) in Florida?

Explanation / Answer

18% in both cases, as he will have to pay only capital gain tax not income taxes.

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