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23 October, 18:56

Christopher sold 100 shares of Cisco stock for $5,500 in the current year. He purchased the shares several years ago for $2,200. Assuming his ordinary income tax rate is 24 percent and he has no other capital gains or losses, how much tax will he pay on this gain?

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  1. 23 October, 19:16
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    tax at 15 % gain = $495

    Explanation:

    given data

    sold = 100 shares

    Sale stock = $5,500

    purchased shares = $2,200

    income tax rate = 24 percent

    to find out

    how much tax will he pay on this gain

    solution

    we know here that at long term gain we have given Sale value and Cost of stocks

    so here total Gain will be

    gain = Sale value - Cost of stocks ... 1

    put here value

    gain = Sale value - Cost of stocks

    gain = $5,500 - $2,200

    gain = $3,300

    so here we can say that

    tax is 15 %

    tax at 15 % gain = 15 % of $3,300

    tax at 15 % gain = $495

    as we know his marginal rate on ordinary gain is above 15%

    so that capital gain must be 15%
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