2008 Capital Gains

Posted on October 28, 2008 
Filed Under Capital Gains and Losses, Federal Income Tax

A taxpayer in the 10% or 15% income tax bracket will not have to pay tax on a net capital gain–a technical term defined as net long-term capital gain in excess of net short-term capital loss–realized in 2008, 2009, or 2010. In particular, a net capital gain will be taxed at a 0% rate for a taxpayer in the 10% or 15% income tax bracket in 2008, 2009, or 2010. But a taxpayer in the 25%, 28%, 33%, or 35% income tax bracket will continue to pay tax at a 15% rate on a net capital gain realized during these years. Click on for a full discussion of income tax brackets and for more information on the concept of net capital gain.

Other capital gains tax rates will not change in 2008. Specifically, a gain on the sale of a collectible or qualified small business stock (Section 1202 stock) will continue to be treated as an item of ordinary income for a taxpayer in the 10%, 15%, 25%, or 28% income tax bracket; but the maximum tax rate on a gain from the sale of a collectible or Section 1202 stock is 28% even if a taxpayer is in a higher income tax bracket (i.e., the 33% or 35% income tax bracket). The regular tax rate also applies in 2008 to recapture of depreciation taken on Section 1250 property for a taxpayer in the 10%, 15%, or 25% income tax bracket; at the same time, the maximum tax rate on Section 1250 recapture is 25% even if a taxpayer is in a higher income tax bracket (viz., the 28%, 33%, or 35% income tax bracket). Additional relevant articles on 2008 capital gains tax rates are listed below:

Many happy returns, Roger

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