In December 2018, 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 the standard deduction, their ordinary income for the year, before the capital gain, is $76,900, making their total income for the year $131,900 ($76,900 + $55,000).In 2018, married taxpayers who file jointly pay tax of $8,850 on the first $76,900 of ordinary taxable income and 15% on long-term capital gains above $77,200.What is their total tax liability?
A)$8,850
B)$17,100
C)$17,055
D)$17,136

Question

Quizplus · Accepted Answer

First, we need to calculate the taxable long-term capital gain. The threshold for 15% long-term capital gains tax is $77,200 and since Ben and Jeri's long-term capital gain is $55,000, only $55,000 - ($77,200 - $76,900) = $700 will be taxed at 15%.

Here's the calculation for their tax liability:

Tax on ordinary income = $8,850
Tax on taxable long-term capital gain = $700 x 15% = $105
Total tax liability = $8,850 + $105 = $17,055

Therefore, the best choice is C.

In December 2018, Ben and Jeri (Married Filing Jointly)have a Long-Term