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1 June, 06:32

Suppose the capital gains tax is 28 percent and you purchased a house ten years ago for $80,000. If you sold the house today you would get $140,000. Your tax liability would be:A. indeterminate without knowing the inflation rate.

B. $16,800.

C. $39,200.

D. indeterminate without knowing the personal income tax rate.

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Answers (1)
  1. 1 June, 08:25
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    correct option is B. $16,800.

    Explanation:

    given data

    capital gains tax = 28 percent

    time period = 10 year

    purchased a house = $80,000

    sold house today = $140,000

    solution

    we get here Capital gain that is getting by the subtracting purchase price from the selling price

    Capital gain = selling price - purchase price ... 1

    put here value and we get

    Capital gain = $140,000 - $80,000

    Capital gain = $60,000

    so here we get Capital Gain Tax Amount that is express as

    Capital Gain Tax Amount = Capital Gain * tax rate ... 2

    Capital Gain Tax Amount = $60,000 * 28%

    Capital Gain Tax Amount = $16,800

    so tax liability would be $16,800

    correct option is B. $16,800.
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Home » Business » Suppose the capital gains tax is 28 percent and you purchased a house ten years ago for $80,000. If you sold the house today you would get $140,000. Your tax liability would be:A. indeterminate without knowing the inflation rate. B. $16,800. C.
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