McGraw-Hill's Taxation of Individuals and Business Entities 3rd Edition by Brian Spilker, Benjamin Ayers, John Robinson, Edmund Outslay, Ronald Worsham, John Barrick, Connie Weaver

Exercise 79

In 2011, Tom and Amanda Jackson (married filing jointly) have $200,000 of taxable income before considering the following events:
a) On May 12, 2011, they sold a painting (art) for $110,000 that was inherited from Grandma on July 23, 2009.The fair market value on the date of Grandma's death was $90,000 and Grandma's adjusted basis of the painting was $25,000.b) Applied a long-term capital loss carryover from 2010 of $10,000.c) Recognized a $12,000 loss on 11/1/11 sale of bonds (acquired on 5/12/02).d) Recognized a $4,000 gain on 12/12/11 sale of IBM stock (acquired on 2/5/11).e) Recognized a $17,000 gain on the 10/17/11 sale of rental property (the only §1231 transaction) of which $8,000 is reportable as gain subject to the 25 percent maximum rate and the remaining $9,000 is subject to the 15 percent maximum rate (the property was acquired on 8/2/05).f) Recognized a $12,000 loss on 12/20/11 sale of bonds (acquired on 1/18/11).g) Recognized a $7,000 gain on 6/27/11 sale of BH stock (acquired on 7/30/03).h) Recognized an $11,000 loss on 6/13/11 sale of QuikCo stock (acquired on 3/20/04).i) Received $500 of qualified dividends on 7/15/11.Complete the required capital gains netting procedures and calculate the Jacksons' 2011 tax liability.