Mr. and Mrs. Tomson\'s taxable income of $42,000 included the following capital

Question

Mr. and Mrs. Tomson's taxable income of $42,000 included the following capital gains:

       Short term gain on shares of Carnival Cruise LLC       $3,000

       Long term gain on shares of Home Depot                    $2,000.

What tax rates will be applied to these gains?

Gain on Carnival: 15%.   Gain on Home Depot: 0%.

Gain on Carnival: 28%. Gain on Home Depot 15%.

Gain on Carnival: 15%.   Gain on Home Depot: 15%.

Gain on Carnival: 28%.   Gain on Home Depot: 28%.

Gain on Carnival: 15%.   Gain on Home Depot: 0%.

Gain on Carnival: 28%. Gain on Home Depot 15%.

Gain on Carnival: 15%.   Gain on Home Depot: 15%.

Gain on Carnival: 28%.   Gain on Home Depot: 28%.

Explanation / Answer

As short term capital gain is taxed at the same rate as ordinary income and since taxable income is $42000 it will taxed at 15%

Long term capital gain tax rate are taxed at lower rate for taxable income between $0-$77200 so tax rate will be 0%

Answer is Gain on Carnival: 15% Gain on home depot:0%

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