Long-term capital gains are taxed

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1. Preston Road Inc. was organized last year when its founders contributed $9 million and issued 3 million shares of $1.25 par value stock. The company earned $750,000 in its first year and paid dividends of $325,000. Construct the Equity section of Preston Road’s balance sheet as of the end of that year.

2.  Joan Petros reported taxable income in 20X2 of $150,000, which included the following transactions:

(1) In June 20X2, Joan sold 100 shares of stock for $40 per share. She had purchased them three months earlier for $35 per share.

(2) In October 20X2, Joan sold 200 shares of stock for $79 per share. She had purchased them three years earlier for $61 per share.

If long-term capital gains are taxed at 15% and all ordinary income is taxed at 25%, what is Joan’s tax liability for 20X2?

Reference no: EM131495401

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