Mr. Scott, a head of household, sold rental real estate that had a $186,200 adjusted basis ($200,000 cost − $13,800 straight-line accumulated depreciation). The sales price was $210,000. This was his only property disposition for the year. Use Individual tax rate schedules and Tax rates for capital gains and qualified dividends.
a.)Compute Mr. Scott’s income tax on his recognized gain assuming that: His marginal tax rate on ordinary income is 12 percent.
b.)His marginal tax rate on ordinary income is 37 percent.