Consider three unmarried investors who need to partially liquidate investments to raise cash. In this​ case, all investments have been held for 3 or more years. Investor A waited for a

​$1 comma 5001,500

qualified dividend distribution from her mutual​ fund, and Investor B received

​$1 comma 5001,500

in interest income from a certificate of deposit.​ However, because Investor C could not wait for a​ distribution, he decided to sell appreciated stock shares with a​ long-term capital gain of

​$1 comma 5001,500.

Assuming no​ commissions, no sales​ charges, no state income​ tax, and other taxable income of​ $100,000, which investment will provide the greatest​ after-tax amount?

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Part 1

Assuming no​ commissions, no sales​ charges, no state income​ tax, and other taxable income of​ $100,000, the investments that will have the greatest​ after-tax amount belong​ to:  ​(Select best answer​ below.)

A.

Investors A and B.

B.

Investors B and C.

C.

Investors A and C.

D.

Investors​ A, B, and C.

To determine which investor will have the greatest after-tax amount, we need to consider the different types of income and the tax rates that apply to each:

1. **Investor A**: Received $1,500 in qualified dividend distribution. Qualified dividends are typically taxed at the long-term capital gains rate, which is 15% for most taxpayers with an income of $100,000.

2. **Investor B**: Received $1,500 in interest income from a certificate of deposit. Interest income is taxed at ordinary income tax rates. For a taxable income of $100,000, the federal tax rate would generally be 24%.

3. **Investor C**: Realized a $1,500 long-term capital gain. Long-term capital gains are taxed at the same rate as qualified dividends, which is 15% for most taxpayers in this income range.

### Tax Calculation:
- **Investor A (qualified dividend)**:
   \[
   1,500 \times 0.15 = 225 \, (\text{tax})
   \]
   \[
   1,500 - 225 = 1,275 \, (\text{after-tax amount})
   \]
   
- **Investor B (interest income)**:
   \[
   1,500 \times 0.24 = 360 \, (\text{tax})
   \]
   \[
   1,500 - 360 = 1,140 \, (\text{after-tax amount})
   \]
   
- **Investor C (long-term capital gain)**:
   \[
   1,500 \times 0.15 = 225 \, (\text{tax})
   \]
   \[
   1,500 - 225 = 1,275 \, (\text{after-tax amount})
   \]

### Comparison of After-Tax Amounts:
- Investor A: $1,275
- Investor B: $1,140
- Investor C: $1,275

### Conclusion:
Investors A and C will have the greatest after-tax amount of $1,275, so the correct answer is **C. Investors A and C**.

Would you like further details or have any questions?

Here are five related questions:
1. How are qualified dividends different from non-qualified dividends?
2. What determines the long-term capital gains tax rate for different income levels?
3. How would state taxes impact the calculations in this scenario?
4. What are the tax implications of short-term capital gains compared to long-term capital gains?
5. How would the tax result differ if the investors had lower total taxable income?

**Tip**: Always check whether your dividends are qualified or non-qualified, as the tax rates can be significantly different!

Consider three unmarried investors who need to partially liquidate investments to raise cash. In this case, all investments have been held for 3 or more years. Investor A waited for a $1,500 qualified dividend distribution from her mutual fund, and Investor B received $1,500 in interest income from a certificate of deposit. However, because Investor C could not wait for a distribution, he decided to sell appreciated stock shares with a long-term capital gain of $1,500. Assuming no commissions, no sales charges, no state income tax, and other taxable income of $100,000, which investment will provide the greatest after-tax amount?

Explore the after-tax returns of three different investments: qualified dividends, interest income, and long-term capital gains. With a taxable income of $100,000, find out which investment provides the greatest after-tax amount using the applicable tax rates of 15% for dividends and capital gains, and 24% for interest income.

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