Chris has taxable income of $123,000. A portion of this income is from capital gains and should receive preferential tax treatment. List the steps below in the order in which they should occur for Chris to be able to determine his overall tax liability. Step 1 Step 1 drop zone empty. Step 2 Step 2 drop zone empty. Step 3 Step 3 drop zone empty. Compute the tax separately on each type of income, using the tax rate schedule on the portion taxed at ordinary rates. Add the tax on the income subject to preferential rates to the tax on the income subject to ordinary rates. Split taxable income into the portion taxed at preferential rates versus the portion taxed at ordinary rates.