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30 March, 01:31

Ronnie owns 600 shares of a stock mutual fund. This year he received dividend distributions of 63 stock mutual fund shares ($19 per share) and long-term capital gain distributions of 46 stock mutual fund shares (also $19 per share). What are the tax consequences of Ronnie's stock mutual fund ownership if he is in a 24 % marginal tax bracket?

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  1. 30 March, 02:27
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    The tax consequences of Ronnie's stock mutual fund ownership if he is in a 24 % marginal tax bracket is that the tax liability for more than one year holding would be $310.65

    Explanation:

    According to given data we have the following:

    long-term capital gain=46*19=$874

    Dividend=63*19=$1,197

    Tax bracket=24%

    The tax rate for the long-term capital gain is 15% for taxpayer having 24% and above tax bracket

    Therefore, to calculate the tax liability for more than one year holding we would have to make the following calculation:

    tax liability for more than one year holding = (long-term capital gain+dividend) * 15%

    tax liability for more than one year holding = ($874+$1,197) * 15%

    tax liability for more than one year holding=$310.65
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