Eva is 67 and unmarried. She receives $12000 a year in SS benefits and $20000 from taxable pension. She is in the 15% tax bracket and claims standard deduction. She wants to sell stock she has had for more than a year. Her cost is $6000 and its fair market value is $13000. she has no other gains or losses for the year. Estimate the tax consequence of selling the stock.
To estimate the tax consequences of selling the stock, we need to determine the following:
1. Calculate the capital gain: The capital gain is the difference between the fair market value of the stock ($13,000) and its cost ($6,000). In this case, the capital gain would be $7,000 ($13,000 - $6,000).
2. Determine the tax rate for long-term capital gains: Since Eva has held the stock for more than a year, the gain will be considered a long-term capital gain. The tax rate for long-term capital gains depends on the taxpayer's income tax bracket. In this case, Eva is in the15% tax bracket.
3. Apply the appropriate tax rate to the capital gain: To calculate the tax liability, we multiply the capital gain by the tax rate. In this case, the tax liability would be 15% of $7,000, which equals $1,050.
Therefore, the estimated tax consequence of selling the stock would be $1,050.