Contemporary Mathematics for Business & Consumers 8th Edition by Robert Brechner,Geroge Bergeman

Exercise 69

There are many tax rules and regulations you should be aware of when investing-whether it be in stocks; bonds; mutual funds; real estate; or collectibles such as artwork, antiques, gems, memorabilia, stamps, and coins. Capital gains are proceeds derived from these types of invest­ments. Unless they are specified as being tax-free, such as municipal bonds, you must pay capi­tal gains taxes on these proceeds.
Capital gains are taxed in one of two ways. If the investment is held for one year or less, this is considered short-term and is taxed as ordinary income at your regular income tax rate. As this is written, if the investment is held for more than one year, it is considered long-term and qualifies for various tax discounts, as follows:

a. If you are in the 20% tax bracket, how much tax will you save by waiting for an invest­ment to become long-term before selling it if your taxable profit from this investment is $25,000
b. How much will you save if you are in the 39.6% tax bracket