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.
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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.
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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
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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%.
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