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 Tax Brackets / Assets Sold period (2014) Tax on Capital gains Same as ordinary Less than All (10%, 15%, 25%, 28%, 12 33%, 35%, and months 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) 25% on gain up to depreciation amount Sale of depreciable real estate Collectibles 28% all gains from collectibles Treat each of the following cases as independent of the others. a. She sold stock for $1,830 that she purchased for $1,500 10 months earlier. Round the answer to the nearest cent. Tax savings should be preceded by a "-" sign. Check My Work Next months 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 25% on gain up to depreciation amount estate Collectibles 28% all gains from collectibles Treat each of the following cases as independent of the others. a. She sold stock for $1,830 that she purchased for $1,500 10 months earlier. Round the answer to the nearest cent. Tax savings should be preceded by a "-" sign. $ b. She sold bonds for $4,700 that she purchased for $4,000 3 years earlier. Round the answer to the nearest dollar. Tax savings should be preceded by a "-" sign. $ C. She sold stock for $3,120 that she purchased for $4,000 17 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. $ Feedback Check My Work Incorrect 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 Tax Brackets / Assets Sold period (2014) Tax on Capital gains Same as ordinary Less than All (10%, 15%, 25%, 28%, 12 33%, 35%, and months 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) 25% on gain up to depreciation amount Sale of depreciable real estate Collectibles 28% all gains from collectibles Treat each of the following cases as independent of the others. a. She sold stock for $1,830 that she purchased for $1,500 10 months earlier. Round the answer to the nearest cent. Tax savings should be preceded by a "-" sign. Check My Work Next months 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 25% on gain up to depreciation amount estate Collectibles 28% all gains from collectibles Treat each of the following cases as independent of the others. a. She sold stock for $1,830 that she purchased for $1,500 10 months earlier. Round the answer to the nearest cent. Tax savings should be preceded by a "-" sign. $ b. She sold bonds for $4,700 that she purchased for $4,000 3 years earlier. Round the answer to the nearest dollar. Tax savings should be preceded by a "-" sign. $ C. She sold stock for $3,120 that she purchased for $4,000 17 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. $ Feedback Check My Work Incorrect