Suppose the annual inflation rate is 10%, and an asset bought at the beginning of the year for $100,000 is sold for $115,000. If the capital-gains tax rate is 30%, what is the (approximate) effective tax rate on the sale of this asset?

A) 10%
B) 20%
C) 25%
D) 30%
E) 4%

ANSWER:

E) 4%