In December,2013,Ben and Jeri Married,filing Jointly)have a Long-Term Capital Gain

question 47

Multiple Choice

In December,2013,Ben and Jeri married,filing jointly) have a long-term capital gain of $55,000 on the sale of stock held for 4 years.They have no other capital gains and losses for the year.After standard deduction and personal exemptions,their ordinary income for the year,before the capital gain,is $72,500,making their total income for the year $127,500,$72,500 + $55,000) .In 2013,married taxpayers pay tax of $9,983 at 10 percent and 15 percent rates from the tax table) on the first $72,500 of ordinary taxable income and 25 percent on ordinary taxable income up to $146,400.What is their total tax liability?

• A)$9,983
• B)$23,733
• C)$18,233
• D)$13,750

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Definitions:

Net Present Value

A method used in capital budgeting to assess the profitability of an investment, calculating the difference between the present value of cash inflows and outflows.

Additional Working Capital

Refers to the extra funds a business requires for its day-to-day operations, beyond its current operational needs.

Salvage Value

The anticipated end-of-service-life residual value of an asset.

Discount Rate

The interest rate used in discounted cash flow analysis to determine the present value of future cash flows, reflecting the investment's risk and the time value of money.