Question

Review the following scenario, then choose the response that correctly completes the last sentence. Maria bought 100 shares of OAK stock for $20 a share on May 23, 2018. On June 6, 2019, she noticed that the stock had increased in value to $25 a share and decided to sell her shares. Maria's only other income for the year consisted of $61,000 in wages. She will claim the standard deduction when she files her return. Maria's revenue from the sale of stock will increase her taxable income by:

Answer 1

Answer:

$500

Explanation:

Maria's long term capital gains = (100 x $25) - (100 x $20) = $500.

Since Maria's gain is classified as a long term gain, she will pay a lower tax rate, not the same tax rate as ordinary income. The tax rate applicable to Maria's gain = 15%, while her marginal income tax was 22%.