Question 1125571: Use the table to answer the question that follows.
Tax Name Investment Earnings Tax Rate
Dividend Income Tax Stock dividends If in bottom 2 tax brackets, not taxed If in top 4 brackets, taxed at 15%
Interest Income Tax Bond coupons Taxed as ordinary income: 10% to 35% Exception: Municipal bond coupons are not taxed.
Capital Gains Tax Gain from sale of
stocks or bonds Held for 1 year or less (short-term): taxed as ordinary income Held for more than 1 year (long-term): taxed as dividend income
Lacey's income put her in the first tax bracket (10%) last year. During that year, she earned $175 in dividends and $475 in coupons on a corporate bond. Five years ago, she purchased a common stock for $250. She sold the same stock last year for $426. What is the total Lacey will pay in taxes on last year's investments? (2 points)
A. $100.15
B. $73.90
C. $47.50
I need this answer asap please. Thank you
Answer by Boreal(15235)   (Show Source):
You can put this solution on YOUR website! Dividends are not taxed in her bracket so no taxes are paid.
$475 is taxed since a corporate bond, and that is taxed at 10%, her bracket, for $47.50
The common stock is a long term gain of $176 and is taxed at dividend income, which is not taxed.
The total paid is $47.50
C
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