Perry, a Single Taxpayer, Has Taxable Income of $178,000 and Is

question 45

Multiple Choice

Perry, a single taxpayer, has taxable income of $178,000 and is in the 32% tax bracket.During 2019, he had the following capital asset transactions: $\begin{array}{lr}\text { Gain from the sale of a stamp collection (held for } 10 \text { years) } & \$ 30,000 \\\text { Gain from the sale of an investment in land (held for } 4 \text { years) } & 10,000 \\\text { Gain from the sale of stock investment (held for } 8 \text { months) } & 4,000\end{array}$ Perry's tax consequences from these gains are as follows:

• A)(15% × $30,000) + (32% × $4,000).
• B)(15% × $10,000) + (28% × $30,000) + (32% × $4,000).
• C)(0% × $10,000) + (28% × $30,000) + (32% × $4,000).
• D)(15% × $40,000) + (32% × $4,000).
• E)None of these.

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Definitions:

Budgeted Income Statement

A financial statement forecasting the revenues, expenses, and net income for a specific period, based on proposed budgets and assumptions.

Contribution Margin Ratio

A financial metric that measures the proportion of sales revenue that exceeds variable costs, indicating how much contributes to covering fixed costs and generating profit.

Sales

The total amount of revenue a company generates from the sale of goods or services before any expenses are deducted.

Margin of Safety

The difference between actual or expected sales and the break-even point, reflecting the cushion against a loss.