For each of the four independent scenarios below, compute the additional amount of income tax (or tax savings if a loss) that would result from current gains and losses for (a) Able Corporation that is taxed at a 35% marginal tax rate or (b) a sole proprietorship whose ordinary income is taxed at a 39.6% rate and long-term capital gains, at a 20% rate. (Ignore the 3.8% net investment income tax for higher-income taxpayers for this problem.)

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Scenario LTCG or (LTCL) STCG or (STCL) $ 5,000 Sec. 1231 Gains Sec. 1231 Losses $ 5,000 $ 5,000 $15,000 $15,000 $10,000 $10,000 $10,000 $20,000 $10,000 $20,000 $ -0- $(15,000) $ 5,000 3 4 $10,000