During $2024,$ your clients, Mr$.$ and Mrs$.$ Howell, owned the following investment assets:

Investment AssetsDate AcquiredPurchase PriceBroker's Commission Paid at Time of Purchase$300$ shares of IBM common $($NYSE: IBM$)11/22/2021$$ $10,580$$ $100200$ shares of IBM common $($NYSE: IBM$)4/3/202243,4803003,000$ shares of Apple preferred $($NASDAQ: AAPL$)12/12/2022170,0001,3002,100$ shares of Cisco common $($NASDAQ: CSCO$)8/14/202354,800550420$ shares of Vanguard mutual fund$3/2/202417,000$No$-$load fund$*$Footnote asterisk

$*$Footnote asteriskNo commissions are charged when no$-$load mutual funds are bought and sold.

Because of the downturn in the stock market, Mr$.$ and Mrs$.$ Howell decided to sell most of their stocks and the mutual fund in $2024$ and to reinvest in municipal bonds. The following investment assets were sold in $2024$:

Investment AssetsDate SoldSale PriceBroker's Commission Paid at Time of Sale$300$ shares of IBM common$5/6$$ $16,000$$ $1003,000$ shares of Apple preferred$10/5223,7002,0002,100$ shares of Cisco common$8/1563,480650451$ shares of Vanguard mutual fund$12/2118,000$No$-$load fund$*$Footnote asterisk

$*$Footnote asteriskNo commissions are charged when no$-$load mutual funds are bought and sold.

The Howells' broker issued them a Form $1099-$B showing the sales proceeds net of the commissions paid. For example, the IBM sales proceeds were reported as $$15,900$ on the Form $1099-$B they received.

In addition to the sales reflected in the table above, the Howells provided you with the following additional information concerning $2024$:

The Howells received a consolidated Form $1099$ from the Vanguard mutual fund reporting a $$900$ long$-$term capital gain distribution. This dividend was reinvested in $31$ additional Vanguard mutual fund shares on $6/30/2024.$

In $2018,$ Mrs$.$ Howell loaned $$8,300$ to a friend who was starting a new multilevel marketing company called LD$3.$ The friend declared bankruptcy in $2024,$ and Mrs$.$ Howell has been notified she will not be receiving any repayment of the loan.

The Howells have a $$4,600$ short$-$term capital loss carryover and a $$7,100$ long$-$term capital loss carryover from prior years.

The Howells did not instruct their broker to sell any particular lot of IBM stock.

The Howells earned $$4,150$ in municipal bond interest, $$4,150$ in interest from corporate bonds, and $$6,300$ in qualified dividends.

Assume the Howells have $$187,500$ of wage income during the year.

Comprehensive Problem $07-63$ Part a$-3($Algo$)$

a$-3.$ Compute the Howells' tax liability for the year $($ignoring the alternative minimum tax and any phase$-$out provisions$)$ assuming they file a joint return, they have no dependents, they don't make any special tax elections, and their itemized deductions total $$30,000.($Use the tax rate schedules, Dividends and Capital Gains Tax Rates.$)$ During $2024,$ your clients, Mr$.$ and Mrs$.$ Howell, owned the following investment assets:

$*$No commissions are charged when no$-$load mutual funds are bought and sold.

Because of the downturn in the stock market, Mr$.$ and Mrs$.$ Howell decided to sell most of their stocks and the mutual fund in $2024$ and to reinvest in municipal bonds. The following investment assets were sold in $2024$:

$*$No commissions are charged when no$-$load mutual funds are bought and sold.