Melinda Sold Mutual Fund Shares, Which She Had Owned for 5

question 36

Multiple Choice

Melinda sold mutual fund shares, which she had owned for 5 years, so that she could use the proceeds to travel with her sister. Melinda is in the 32% ordinary tax bracket, and her capital gain from the sale was $40,000. Melinda's tax liability on the gain is:

• A) $10,500.
• B) $8,400.
• C) $6,000.
• D) $4,500.
• E) $1,500.

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Definitions:

Credit Balance

The amount appearing on the credit side of a ledger, indicating the total credits exceed the total debits in an account.

Debit Balance

It is the remaining amount owing in an account after all debits and credits have been accounted for, typically found in asset and expense accounts.

Recorded By Credits

Recorded by Credits refers to accounting entries made on the credit side of an account, indicating an increase in liabilities, revenue, or equity, or a decrease in assets.

Decreases

A reduction in the quantity, size, or value of something.