Capital Gains Tax
Response to the following problem:
In March of 2014, Shirley sold stock of the Wingate Corporation for $15,000. Shirley had acquired the stock three years earlier at a cost of $11,600. Exclusive of this gain she expects to have a taxable income of $34,000 (after deductions and exemptions) for the year. Shirley files as single. She has no qualified dividends. In December 2014, Shirley contemplated selling stock of the Roberts Printing Company, which she acquired on January 15, 2013, for $18,000. It has since declined in value to $13,000.
a. Compute Shirley's total tax liability for 2014, assuming she does not sell the Roberts stock in 2014.
b. Compute Shirley's total tax liability for 2014, assuming she sells the Roberts stock for $13,000 in 2014. What amount of tax savings would result from the sale?