Chapter 3 Financial Planning Exercise 3 Calculating taxes on security transactions

If Olivia Garcia is single and in the 33% tax bracket, calculate the tax associated with each of the following transactions. (Use the IRS regulations for capital gains in effect in 2014.)

EXHIBIT 3.2 Capital Gains Tax Categories as of 2014

Capital gains tax rates are as low as 0 percent for low-income or as high as 28 percent for higher income levels and certain types of assets, so long as the holding period is more than 12 months.

Holding period	Tax Brackets/Assets Sold (2014)	Tax on Capital gains
Less than 12 months	All (10%, 15%, 25%, 28%, 33%, 35%, and	Same as ordinary income
	39.6%) - any asset sold
Over 12 months	10% and 15% - assets other than real estate and collectibles	0%
	25%, 33%, 35%, 39.6%	15%, or 20% (later only if in 39.6% tax bracket)
	Sale of depreciable real estate	25% on gain up to depreciation amount
	Collectibles	28% all gains from collectibles

Treat each of the following cases as independent of the others.

1. She sold stock for $5,280 that she purchased for $4,000 11 months earlier. Round the answer to the nearest cent. Tax savings should be preceded by a "-" sign. $
2. She sold bonds for $4,500 that she purchased for $3,500 4 years earlier. Round the answer to the nearest dollar. Tax savings should be preceded by a "-" sign. $
3. She sold stock for $1,760 that she purchased for $2,000 19 months earlier. Assume this to be the only Stock in Olivia's portfolio. Round the answer to the nearest cent. Tax savings should be preceded by a "-" sign. $