Maya expects to report about $2 million of AGI and $1.7 million of taxable income. Her AGI is composed of $1.25 million of salary, and the balance is investment income. Maya is thinking about selling some stock before year-end. She purchased the stock three years ago and expects to recognize a $500,000 gain. How much federal tax will she pay in total on the stock gain?
A) $119,000
B) $100,000
C) $75,000
D) $185,000
A) $119,000
The gain will be subject to the 20% income tax rate on the LTCG and the 3.8% Medicare tax on investment income. $500,000 × 23.8% = $119,000.
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