Tax on investment income for higher-income taxpayers

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Bill and Laura are in the 39.6% tax bracket for ordinary income and the 20% bracket for capital gains (ignore the 3.8% additional tax on investment income for higher-income taxpayers.) They have owned several blocks of stock for many years. They are considering the sale of two blocks of stock. The sale of one block would produce a gain of $15,000. The sale of the other would produce a loss of $19,000. For purposes of this problem, ignore personal exemptions, itemized deductions and other phase-outs. They have no other gains or losses this year.

How much tax will they save if they sell the block of stock that produces a loss?

How much additional tax will they pay if they sell the block of stock that produces a gain?

What will be the impact on their taxes if they sell both blocks of stock?

Reference no: EM131219209

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