Henry, a Single Taxpayer with a Marginal Tax Rate of 35

question 63

Essay

Henry, a single taxpayer with a marginal tax rate of 35 percent, sold the following assets during the year: $$\begin{array} { | c | c | c | c | c | } \hline \text { Asset } & \text { Sale Price } & \text { Tax Basis } & \text { Gain/Loss } & \begin{array} { c } \text { Holding } \\\text { Period }\end{array} \\\hline \text { ABC Stock } & \$ 50,000 & \$ 25,000 & \$ 25,000 & \begin{array} { c } \text { More than 1 } \\\text { Year }\end{array} \\\hline \text { XYZ Stock } & \$ 12,000 & \$ 9,000 & \$ 3,000 & \begin{array} { c } \text { Less than 1 } \\\text { Year }\end{array} \\\hline \text { Stamp Collection } & \$ 10,000 & \$ 5,000 & \$ 5,000 & \begin{array} { c } \text { More than 1 } \\\text { Year }\end{array} \\\hline \text { RST Stock } & \$ 13,000 & \$ 19,000 & ( \$ 6,000 ) & \begin{array} { c } \text { Less than 1 } \\\text { Year }\end{array} \\\hline \text { Rental Home } & \$ 100,000 & \$ 50,000 ^ { * } & \$ 50,000 & \begin{array} { c } \text { More than 1 } \\\text { Year }\end{array} \\\hline\end{array}$$ *The original purchase price of the rental home was $75,000. The current tax basis reflects $25,000 of tax depreciation taken.
What tax rate(s) will apply to Henry's capital gains or losses?

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Definitions:

Fungal Body

The physical structure of a fungus, including mycelium and fruiting bodies, which supports growth, reproduction, and nutrient absorption.

Function

A specific purpose or role of a component or system.

Decomposer

Organisms, typically bacteria and fungi, that break down dead or decaying organisms, thereby playing a key role in the nutrient cycle.

Saccharomyces

A genus of fungi that includes many yeast species, widely used in baking, brewing, and wine-making.