Homework SourseProblem 350 c LO 6 8 During the year Isabelle recorded the f
Problem 3-50 (c) (LO. 6, 8)
During the year, Isabelle recorded the following transactions involving capital assets.
Indicate the tax treatment for each item:
Overall, Isabelle has of $ and of $.
a. If Isabelle is in the 35% Federal income tax bracket, how much tax results?
$
b. If Isabelle is in the 15% bracket?
$
|
Solution
Indicating the Tax Treatment for Each Item:
a) Calculation of the Tax Results with 35% Federal Income Tax Bracket:
Tax = -$8,000 + $4,500 + $12,500 - $3,500
= $5,500 * 35%
= $1,925
Therefore, the Tax is $1,925, with 35% Federal Income Tax Bracket.
b) Calculation of the Tax Results with 15% Federal Income Tax Bracket:
Tax = -$8,000 + $4,500 + $12,500 - $3,500
= $5,500 * 15%
= $825
Therefore, the Tax is $825, with 15% Federal Income Tax Bracket.
| Transaction | Amount | Tax Treatment |
| Loss on Sale of Land Held for Investment (Purchased 11 Months Ago) | ($8,000) | Nil |
| Gain on Sale of a Personal Speed Boat (Purchased Seven Years Ago) | $4,500 | 20% |
| Gain on Sale of a Corporate Stock (Purchased Four Years Ago as an Investment) | $12,500 | Nil |
| Loss on Sale of a Personal Vehicle (Puchased Nine Months Ago) | ($3,500) | Nil |
