Ask Question
BusinessBusiness
2 July, 20:59

Henrich is a single taxpayer. In 2019, his taxable income is $455,000.

What is his income tax and net investment income tax liability in each of the following alternative scenarios? Use Tax Rate Schedule, Dividends, and Capital Gains Tax Rates, Estates and Trusts for reference.

1) His $425,000 of taxable income includes $2,000 of a long-term capital gain that is taxed at preferential rates.

2) His $425,000 of taxable income includes $55,000 of a long-term capital gain that is taxed at preferential rates.

3) Henrich has $195,000 of taxable income, which includes $50,000 of a long-term capital gain that is taxed at preferential rates. Assume his modified AGI is $210,000.

+2
Answers (1)
  1. 2 July, 21:17
    0
    Step by step answers are given below.

    Explanation:

    A. All of his income is salary from his employer

    Description Amount Remarks

    Taxable Income (a) $425,000

    Prefrentially taxed income (b) $0

    Income taxed at ordinary rates (c) $425,000

    Tax on c above (d) $124,469.95 = $120,529.75 + [ ($425,000 - $415,050) x 39.6%]

    Tax on b above (e) $0

    Total Income tax (f) $124,469.95 (d + e)

    Investment Income, if any (g) $0 No Investment Income

    Net Income tax payable $124,469.95

    B. His $425,000 of taxable income includes $2,000 of long-term capital gain that is taxed at preferential rates

    Description Amount Remarks

    Taxable Income (a) $425,000

    Prefrentially taxed income (b) $2,000

    Income taxed at ordinary rates (c) $423,000

    Tax on c above (d) $123,677.95 = $120,529.75 + [ ($423,000 - $415,050) x 39.6%]

    Tax on b above (e) $400 = $2,000 x 20%, Since marginal rate is 39.6%

    Total Income tax (f) $124,077.95 (d + e)

    Investment Income, if any (g) $76 Since AGI exceeds $200,000, the entire Long term cap gain is subject to the 3.8% net investment income tax ($2,000 x 3.8% = $76)

    Net Income tax payable $124,153.95 (f + g)

    C. His $425,000 of taxable income includes $55,000 of long-term capital gain that is taxed at preferential rates

    Description Amount Remarks

    Taxable Income (a) $425,000

    Prefrentially taxed income (b) $55,000

    Income taxed at ordinary rates (c) $370,000

    Tax on c above (d) $105,629.25 = $46,278.75 + [ ($370,000 - $190,150) x 33%]

    Tax on b above (e) $8,747.50 Since $45,050 income would be taxed at 33% or 35% if it would be ordinary income, rest at 39.6% i. e. [ ($45,050 x 15%) + ($9,950 x 20%) ]

    Total Income tax (f) $114,376.75 (d + e)

    Investment Income, if any (g) $2,090 Since AGI exceeds $200,000, the entire Long term cap gain is subject to the 3.8% net investment income tax ($55,000 x 3.8% = $2,090)

    Net Income tax payable $116,466.75 (f + g)

    D. Henrich has $195,000 of taxable income, which includes $50,000 of long-term capital gain that is taxed at preferential rates. Assume his modified AGI is $210,000

    Description Amount Remarks

    Taxable Income (a) $195,000

    Prefrentially taxed income (b) $50,000

    Income taxed at ordinary rates (c) $145,000

    Tax on c above (d) $33,636.75 = $18,558.75 + [ ($145,000 - $91,150) x 28%]

    Tax on b above (e) $7,500.00 = $50,000 x 15%

    Total Income tax (f) $41,136.75 (d + e)

    Investment Income, if any (g) $380 Only $10,000 is taxed at 3.8%, only ($210,000 - $200,000) i. e. $10,000

    Net Income tax payable $41,516.75 (f + g)
Know the Answer?
Not Sure About the Answer?
Find an answer to your question 👍 “Henrich is a single taxpayer. In 2019, his taxable income is $455,000. What is his income tax and net investment income tax liability in ...” in 📗 Business if the answers seem to be not correct or there’s no answer. Try a smart search to find answers to similar questions.
Search for Other Answers
You Might be Interested in
Which value proposition is the most difficult to sustain in the long run? a. more for less b. more for more c. the same for less d. less for much less e. more for the same?
Answers (1)
The journal entry to record the receipt of inventory purchased for cash in a perpetual inventory system would be a. Jan. 1Inventory1,500 Cash1,500 b. Jan. 1Cash1,500 Accounts Receivable1,500 c. Jan. 1Purchases1,500 Accounts Payable1,500 d. Jan.
Answers (1)
Run-of-the-Mills provides your marketing firm with the following dа ta: When the price of penguin patties decreases by 20%, the quantity of raskels sold decreases by 22% and the quantity of kipples sold increases by 7%.
Answers (1)
Sheffield Furniture factors $914000 of receivables to Ivanhoe, Inc. Ivanhoe assesses a 3% service charge on the amount of receivables sold. Sheffield Furniture factors its receivables regularly with Ivanhoe Factors.
Answers (2)
Cheyenne Corp. received a check for $15840 on July 1, which represents a 6-month advance payment of rent on a building it rents to a client. Unearned Rent Revenue was credited for the full $15840. Financial statements will be prepared on July 31.
Answers (1)
New Questions in Business
For an airline, which of the following would not be an operational budget? A cash receipts budget of flying consumers. A budget of planned air miles to be flown. A fuel budget. A materials budget for aircraft parts. A labor budget for flight crew.
Answers (2)
When interpreting the ed value as either elastic or inelastic, we look at the?
Answers (1)
A noted business executive said, "A company's first obligation is to be profitable. Unprofitable enterprises can't afford to be socially responsible." Do you agree? Discuss.
Answers (1)
Power and performance sports are dominant today because they do not foster the interests of people and organizations with the resources to sponsor and stage large sports events.
Answers (1)
9) Consider the following four alternatives: 1. $132 received in two years. 2. $160 received in five years. 3. $200 received in eight years. 4. $220 received in ten years.
Answers (1)
Home » Business » Henrich is a single taxpayer. In 2019, his taxable income is $455,000. What is his income tax and net investment income tax liability in each of the following alternative scenarios?
Sign Up Forgot Password?