Question
Mary Jarvis is a single individual who is working on filing her tax return for the...
Mary Jarvis is a single individual who is working on filing her tax return for the previous year. She has assembled the following relevant information:
She received $101,000 in salary.
She received $18,000 of dividend income.
She received $6,100 of interest income on Home Depot bonds.
She received $22,500 from the sale of Disney stock that was purchased 2 years prior to the sale at a cost of $9,000.
She received $10,500 from the sale of Google stock that was purchased 6 months prior to the sale at a cost of $5,500.
Mary only has allowable itemized deductions of $5,500, so she will take the standard deduction of $12,000 will be deducted from her gross income to determine her taxable income.
Assume that her tax rates are based on Table 3.5.

What is Mary's federal tax liability? Enter your answer as a positive value. Do not round intermediate calculations. Round your answer to the nearest cent.
$

What is her marginal tax rate? Do not round intermediate calculations. Round your answer to one decimal place.
%

What is her average tax rate? Do not round intermediate calculations. Round your answer to two decimal places.
%
Answers
Computation of total taxable income of Mary Jarvis S.no Particulars Amount $ Amount $ A Salary Income 101000 B Dividend Income 18000 C Interest income on Home depot bonds 6100 D Capital Gains from sale of disney Stock Sale value less Cost = (22,5009,000) 13500 E Capital Gains from sale of google Stock Sale value less Cost = (10,5005,500) 5000 F Gross total income(A+B+C+D+E) 143600 G Less: standard Deduction 12000 H Net taxable income( FG) 131600 Since mary is single individual and her taxable income is $131600 she falls under 4Th bracket where she has to pay $14,089.50 on base of bracket($82,500) and 24% on excess over base which amounts to $11,784 ( 131600 base of 82500)* 24%
A) Mary's federal Tax laibility would be $25873.5.
B) Marginal tax rate would be 24%
C) Average Tax rate would be 19.66 % ( $25873.5/ 131600= 19.66%)