Edith, who has no other sales or exchanges and no nonrecaptured Sec. 1231 losses, sells three tracts of land that are used in her trade or business. Edith is single, and her regular income tax rate is 33%.
• Asset #1—$15,000 gain and holding period of 20 months
• Asset #2—$17,000 loss and holding period of 25 months
• Asset #3—$ 5,000 gain and holding period of 13 months
a. What is the increase in her taxes as a result of the three sales?
b. If the holding period for Asset #2 is nine months, what is the decrease in her taxes as a result of the three sales?
c. Same as part a except her tax rate is 39.6%.