In 2000, Ms. Ennis, a head of household, contributed $50,000 in exchange for 500 shares of Seta stock. Seta is a qualified small business. This year, Ms. Ennis sold all 500 shares for $117,400. Her only other investment income was an $8,600 long-term capital gain from the sale of land. Her taxable income before consideration of her two capital transactions is $590,000.
a. Compute Ms. Ennis’s income tax and Medicare contribution tax for the year.
b. How would the computation change if Ms. Ennis acquired the Seta stock in 2014 instead of 2000?