Question

"An investor sells an office property he has owned for three years and has a capital gain of $125,000. His ordinary income tax rate is 28%. His long-term capital gains are taxed at a maximum of 15%. Using just this information, how much will his taxes be for this transaction?"

Answer 1

Answer:

Taxes = $18,750

Explanation:

Since the investor sold his office after three years of owning it, the long-term capital gains whose tax is 15% apply. While the ordinary income tax rate does not affect the transaction.

So, the taxes for the transaction will be,

Taxes = $125,000 x 15% = $18,750

Hope this helps!