Cason is filing as single and has 2019 taxable income of $36,000 which includes $34,000 0% / 15 % / 20% net long-term MID capital gain. What is his tax on taxable income using the alternative tax method? Note: Use the tax rate schedule rather than the tax table. FA

a. 50

b. $200

c. 5300

d. $4924

e. None of these.

The correct answer of this question is b-200$.

Explanation:

As per tax schedule if income from capital gain is less than 39,375$ 0% tax is charge lieved.

So on his income from capital gain that is 34,000 dollars no tax will be charge. However the remaining income is subject to income tax that is (36000-34000) = 2000 dollars. So Cason is liable to pay tax equals to 200$. (2000*10%)

As per tax law whose income is less than 9,750 dolars is liable to pay tax at the rate of 10%.