For 2016, Ernst and Emily have properly determined that their taxable income is $69,800, including $6,000 of unrecaptured § 1250 gain and $3,500 of 0%/15%/20% gain. They file a joint tax return.
Click here to access the tax rate schedules to use for this problem.
Round your final answers to the nearest dollar.
a. Are both the $6,000 unrecaptured § 1250 gain and $3,500 of 0%/15%/20% gain subject to the alternative tax computation?
b. Compute Ernst and Emily's tax liability and tax savings from the alternative tax on net capital gain.
Their tax liability is $ , and the tax saving from the alternative tax computation is $ .