Capital Gains and Losses
Response to the following problem:
For each of the following cases, determine whether the gain would be taxed as short-term capital gain, long-term capital gain taxed at 20%, long-term capital gain taxed at 15%, or long-term capital gain taxed at 0%.
Assume the taxpayer files as single and this is the only capital asset sold during the year.
a. Stock held for four years is sold for a $3,000 gain; taxable income is $25,000.
b. Stock held for eight months is sold for a $3,000 gain; taxable income is $52,000.
c. Stock held for four years is sold for a $2,000 gain; taxable income is $77,000.
d. Stock held for four years is sold for a $4,000 gain; taxable income is $480,000.
e. Stock held four months is sold for a $4,000 gain; taxable income is $410,000.