In 2014 Lois purchased a painting for $5,000 at a local art gallery. She decided to sell the painting in 2019 and finds a buyer willing to pay $12,000. What is the maximum capital gains rate and maximum amount she may owe

The maximum capital gains rate and maximum amount she may owe is  28% capital gains rate and $1960 owed.

The realised gain on the sale of the painting.

= $12000 - $5000

= $7000

As per IRS, the maximum capital gain rate on collectible is 28%.

Therefore, the tax that may be owed will be:

= 28% × $7000

 = .28 × $7000

= $1960

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28% capital gains rate and $1960 owed.

Explanation:

First, we have to calculate the realised gain on the sale of the painting. This will be:

= $12000 - $5000 = $7000

We should also note that as per IRS, the maximum capital gain rate on collectible is 28%. Therefore, the tax that may be owed will be:

= 28% × $7000

= 28/100 × $7000

= .28 × $7000

= $1960

Therefore, the maximum capital gains rate is 28% and the maximum amount she may owe is $1960.

turnover

the amount of money taken by a business in a particular period.

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