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Hello, I would like the answer to case 1 in the pdf I am including. It deals with using the capital gain netting process and tax formula to determine the taxpayer’s taxable income. It also includes the standard deduction.

CASE 1
A
B
C
D
Antiques
Rental
Total
Short-Term
(12,000)
25%
0/15/20%
325,100
1,000
(6,000)
10,000
(11,000)
Income
Ordinary Inc
Short-T (G/L)
28%
25%
0/15/20%
Total Inc
AGI Deductions
Standard Ded
Taxable Inc
160,700
29,000
319,100
508,800
12,400
496,400
Income by Charact.
Ordinary Inc
28%
25%
0/15/20%
148,300
29,000
319,100
BASE
Ordinary income
25% @ ordinary rates
25% @ Max.
0/15/20 @ 15%
0/15/20 @ 20%
Tax Liability
28%
10,000
TAX
148,300
15,000
14,000
264,150
54,950
29,671.50
3,600
3,500
39,622.50
10,990
87,383
30,000
30,000
319,100
Work
Total Inc
Taxable Inc
Ordinary income
25% @ ordinary rate
25% @ Max.
0/15/20 @ 15%
0/15/20 @ 20%
Short-Term
28%
(1,000)
25%
30,000
Ordinary Inc
160,700
25%
29,000
–net–>
160,700+29,000+319,100 = 508,800
508,800-12,400=496400
(148,300-85,525)*24+14,605.50=29,671.50
(163,300-148,300)*24%=3,600
(15,000-29,000)*25%=3,500
(441,450-177,300)*15%=39,622.50
(319,100 -264150)*20%=10,990
0/15/20%
319,100
0/15/20%
319,100
Short-Term
–net–>
28%
25%
29,000
0/15/20%
319,100
CASE 1
A
B
C
D
Antiques
Rental
Total
Short-Term
(12.000)
25%
0/15/20%
325.100
1.000
(6.000)
10.000
(11.000)
Income
Ordinary Inc
Short-T (G/L)
28%
25%
0/15/20%
Total Inc
AGI Deductions
Standard Ded
Taxable Inc
160.700
29.000
319.100
508.800
12.400
496.400
Income by Charact.
Ordinary Inc
28%
25%
0/15/20%
148.300
29.000
319.100
BASE
Ordinary income
25% @ ordinary rates
25% @ Max.
0/15/20 @ 15%
0/15/20 @ 20%
Tax Liability
28%
10.000
TAX
148.300
15.000
14.000
264.150
54.950
29.671,50
3.600
3.500
39.622,50
10.990
87.383
30.000
30.000
319.100
Work
Total Inc
Taxable Inc
Ordinary income
25% @ ordinary rate
25% @ Max.
0/15/20 @ 15%
0/15/20 @ 20%
Short-Term
28%
(1.000)
25%
30.000
Ordinary Inc
160.700
25%
29.000
–net–>
160,700+29,000+319,100 = 508,800
508,800-12,400=496400
(148,300-85,525)*24+14,605.50=29,671.50
(163,300-148,300)*24%=3,600
(15,000-29,000)*25%=3,500
(441,450-177,300)*15%=39,622.50
(319,100 -264150)*20%=10,990
0/15/20%
319.100
0/15/20%
319.100
Short-Term
–net–>
28%
25%
29.000
0/15/20%
319.100
SAMPLE SOLUTION
TAXPAYER INFORMATION
Marital status
Ordinary income before capital gains (losses)
For AGI deductions
Itemized deductions
Standard deduction
QBID
Tax credits
Single
15,000
None
None
12,400
None
None
SALES DATA
Description
Date
Purchased
Stock A
Stock B
Stock C
Stock D
Antiques
Rental property
1/1/2001
1/1/2001
1/2/2020
1/2/2020
1/1/2001
1/1/2001
Adjusted
Basis
12/31/2020
12/31/2020
12/31/2020
12/31/2020
12/31/2020
12/31/2020
NETTING
ST
Description
CHARACTER
Date
Sold
LT
28
Short-Term
LT
Long-Term
25-Percent
28-Percent
Amount Realized
3,000
10,000
2,000
3,000
1,000
50,000
25
1,000
60,000
1,000
1,000
1,000
50,000
LT
15
0/15/20-Percent
Stock A
Stock B
Stock C
Stock D
Antiques
Rental property
(1,000)
(2,000)



(2,000)
50,000

Subtotal
Netting:
ST -> 28
ST -> 25
ST ->0/15/20
(3,000)


48,000
3,000



Total

(3,000)
45,000
TAX FORMULA AND CHARACTER SUMMARY
INCOME:
Ordinary income
Short-term capital gains (losses)
Long-term capital gains (losses)
28-percent
25-percent
0/15/20-percent
15,000
45,000
TOTAL INCOME
DEDUCTIONS FOR AGI
60,000

AGI
DEDUCTIONS FROM AGI:
Standard deduction
QBID
60,000
TOTAL DEDUCTIONS FROM AGI
TAXABLE INCOME
12,400
47,600
12,400

TAXABLE INCOME BY CHARACTER:
Ordinary
Net capital gain:
28-percent
25-percent
0/15/20-percent
45,000
TOTAL TAXABLE INCOME BY CHARACTER
47,600
2,600
TAX
BASE
Ordinary income
25 percent gain taxed at ordinary rates
28 percent gain taxed at ordinary rates
0/15/20-percent gain taxed at 0%
0/15/20-percent gain taxed at 15%
0/15/20-percent gain taxed at 20%
25-percent gain taxed at 25%
28-percent gain taxed at 28%
Federal income tax liability
TAX
2,600
37,400
7,600

260.00
1,140.00

47,600.00
1,400.00
Holding
Type
LT
LT
ST
ST
LT
LT
15
15
15
15
28
25
CHECK TOTALS
Gain
(Loss)
(2,000)
50,000
(1,000)
(2,000)

ST
LT
LT
LT
15
28
25
15
(3,000)
48,000

QUIZ II – CASE 1
INSTRUCTIONS:
Using the taxpayer information and sales data below, net any capital gains and losses, apply the
capital gain netting process, use the tax formula to determine the taxable income, and calculate
the taxpayer’s tax liability for the 2020 taxable year. Note that all gain realized on the sale of
the rental property is 25 percent rate gain. See the sample solution provided for the
recommended presentation. Your solution must show the netting process and tax liability
calculations. Solutions that do not show work will not be awarded credit.
TAXPAYER INFORMATION
Marital status
Ordinary income before capital gains (losses)
For AGI deductions
Itemized deductions
Standard deduction
QBID
Tax credits
Single
160,700
None
None
12,400
None
None
SALES DATA
Description
Stock A
Stock B
Stock C
Stock D
Antiques
Rental property1
Date
Purchased
6/1/2019
1/15/2017
2/1/2020
7/14/2012
3/1/1994
8/15/2010
Date
Sold
1/2/2020
11/30/2020
6/15/2020
9/5/2020
7/1/2020
4/22/2020
CHARACTER
Adjusted
Basis
18,000
11,000
200
22,000
20,000
69,000
Amount Realized
6,000
336,100
1,200
16,000
30,000
99,000
Holding
Type
ST
LT
ST
LT
LT
LT
15
15
15
15
28
25
CHECK TOTALS
Gain
(Loss)
(12,000)
325,100
1,000
(6,000)
10,000
30,000
ST
LT
LT
LT
15
28
25
15
(11,000)
10,000
30,000
319,100

QUIZ II – CASE 2
INSTRUCTIONS:
Using the taxpayer information and sales data below, net any capital gains and losses, apply the
capital gain netting process, use the tax formula to determine the taxable income, and calculate
the taxpayer’s tax liability for the 2020 taxable year. Note that all gain realized on the sale of
the rental property is 25 percent rate gain. See the sample solution provided for the
recommended presentation. Your solution must show the netting process and tax liability
calculations. Solutions that do not show work will not be awarded credit.
TAXPAYER INFORMATION
Marital status
Ordinary income before capital gains (losses)
For AGI deductions
Itemized deductions
Standard deduction
QBID
Tax credits
Married Filing Jointly
339,400
None
None
24,800
None
None
SALES DATA
Description
Stock A
Stock B
Stock C
Stock D
Antiques
Rental property1
Date
Purchased
6/1/2019
1/15/2016
2/1/2020
7/14/2012
3/1/1993
8/15/2009
Date
Sold
1/2/2020
11/30/2020
6/15/2020
9/5/2020
7/1/2020
4/22/2020
CHARACTER
Adjusted
Basis
7,500
9,000
8,200
7,500
20,000
110,000
Amount Realized
11,000
185,000
2,700
2,500
21,000
150,000
Holding
Type
ST
LT
ST
LT
LT
LT
15
15
15
15
28
25
CHECK TOTALS
Gain
(Loss)
3,500
176,000
(5,500)
(5,000)
1,000
40,000
ST
LT
LT
LT
15
28
25
15
(2,000)
1,000
40,000
171,000

FED TAX I
SPRING 2021
QUIZ II
CASE ASSIGNMENTS
AGURTO, RHODERICK
ALICHANDRIDON, HASHAN
ALONZO, ROSEANNE
ALVAREZ, KAREN N
APARICIO, ISRAEL
ASGHAR, HUMZA
BEKLEMISHAVA, INGA
CAMACHO, MADELINE
CARCAMO, JAKLYN
CARTER, GARY
CHEN, GUANGFU
CORONEL CRUZ, JENNIFER
DONG, SHIRLEY
FLORES, JOSE A
GRINBERG, RACHEL M
GUERRERO, JUAN F
HARBISON, ELMER S
HE, WEIQI
HERNANDEZ, RACHEL M
HOSEIN, MUKESH K
HOWSON, RACQUEL A
KHALMOHAMMAD, MUZHGAN
KHAN, MISHAL
KHEDERLARIAN, MICHAEL M
KOFFI, AVOURA MARIE
LI, BIXUAN
LU, YOUFEN
MARTINEZ, DARRYL I
MASIELLO, PAIGE A
MEJIADEJESUS, MELODY N
MENDOZA ALFONSO, MIRIAN L
MONZON BARILLAS, JOSE F
MULLIGAN, RYAN M
MUNSHI, SHADMAN
NAEEM, MARIYAM
NEWSOME, ESSENCE J
PATIL, HARSHAL R
PAYANO, CYNTHIA
PENAFIEL, NELSON A
PICHARDO, ANA I
SALINAS-NGUYEN, GIANELLA M
SANGARE, ABDOULAYE
SANRELUS, IGENSON
SHOKRALLA, MIEIR M
SMIRNOVA, ALENA A
STENNETT, ZOLA K
THIAM, MARIAMA
WARE, LABRENA R
WU, HENGWEI
XU, DUOJIA
ZARAMA, SORAYA D
1
2
1
2
1
2
1
2
1
2
1
2
1
2
1
2
1
2
1
2
1
2
1
2
1
2
1
2
1
2
1
2
1
2
1
2
1
2
1
2
1
2
1
2
1
2
1
2
1
2
1
Tax Rates for Net Capital Gains and Qualified Dividends
Rate
Taxable Income
Married Filing Jointly Married Filing Separately
Single
Head of Household
Trusts and Estates
0%
SO-S80,000
$0-$40.000
$0-$40.000
$0-$53.600
$0-$2,650
15% $80.001-$496.600
$40,001-$248,300
$40.001-$441,450 $53.601-469,050 $2.651-$13.150
20%
$496,601+
$248,301-
$441,451+
$469,051-
$13,151+
“This rate applies to the net capital gains and qualified dividends that fall within the range of taxable income specified in the table (net capital gains and qualified dividends are included in taxable income last
for this purpose).
Individuals
Schedule X-Single
If taxable income is
But not
If taxable income is
over:
Over:
over:
0
$ 9,875
$
0
$
$
9,875
$ 40,125
$ 14,100
S40,125
$ 85.525
$ 53,700
The tax is:
10% of taxable income
5987.50 plus 12% of the excess over
$9.875
$4.617.50 plus 22% of the excess over
$40,125
$14,605.50 plus 24% of the excess over
585,525
$33,271.50 plus 32% of the excess over
S163.300
$47.367.50 plus 35% of the excess over
$207,350
$ 85.525
$163.300
S 85,500
$163,300
$207,350
$163,300
$207,350
$518,400
$207,350
$518,400
$518,400
$156,235 plus 37% of the excess over
$518,400

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