Frank is filing single. He purchased 200 shares of BTL stock in 2019. He sold the shares for a net gain of $4,000 in 2023. Frank's 2023 taxable income is $83,500. His gain on the stock sale will be taxed at what rate?

1 answer

To determine the tax rate on Frank's capital gains from the sale of his BTL stock, we need to consider the holding period of the investment and his taxable income.

  1. Holding Period: Since Frank purchased the stock in 2019 and sold it in 2023, he held the stock for more than one year. This means the gain is classified as a long-term capital gain.

  2. Long-Term Capital Gains Tax Rates: For the tax year 2023, the long-term capital gains tax rates depend on the taxpayer's income bracket. The long-term capital gains rates for single filers in 2023 are as follows:

    • 0% for income up to $44,625
    • 15% for income from $44,626 to $492,300
    • 20% for income over $492,300
  3. Frank's Income: Frank's taxable income for 2023 is $83,500.

Since Frank's taxable income of $83,500 falls within the range of $44,626 to $492,300, his long-term capital gains will be taxed at the 15% rate.

Thus, Frank's gain on the stock sale will be taxed at a rate of 15%.