Fill This Form To Receive Instant Help
Homework answers / question archive / Jana just found out that she is going to receive an end-of-year bonus of $26,200
Jana just found out that she is going to receive an end-of-year bonus of $26,200. She is in the 35 percent marginal tax bracket. Calculate her income tax on this bonus. Now assume that instead of receiving a bonus, Jana receives the $26,200 as a long-term capital gain. What will be her tax? Which form of compensation offers Jana the best after-tax return? Would your calculation be different if the gain was short-term rather than long-term? Her income tax on this bonus is $ (Round to the nearest dollar.) Now assume that instead of receiving a bonus, Jana receives the $26,200 as a long-term capital gain. What will be her tax? Which form of compensation offers Jana the best after-tax return? Would your calculation be different if the gain was short-term rather than long-term? (Select the best answer below.)
O A. Jana will pay $3,930 ($26,200 x 15%) in long-term capital gains taxes. Due to the reduced tax rate, the long-term capital gain offers Jana the best after-tax return. Because short-term capital gains are taxed as ordinary income, she will not receive any tax benefit if she receives the bonus as a short-term capital gain.
B. Jana will pay $3,930 ($26,200 x 15%) in long-term capital gains taxes. Due to the reduced tax rate, the short-term capital gain offers Jana the best after-tax return. Because long-term capital gains are taxed as ordinary income, she will not receive any tax benefit if she receives the bonus as a long-term capital gain.
Already member? Sign In