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Capital Gains and Losses
Questions and comments about tax rules for buying and selling stocks, mutual funds, real estate and other assets.
LT Capital Gain at Income Tax Bracket Boundary
Posted by: kaamen (IP Logged)
Date: November 27, 2005 02:40AM
Let's assume this is for a single with $29500 AGI excluding capital gain, which puts him at the 15% income tax bracket (up to $29700). Now if he has $500 long term capital gain, how is the tax calculated? Will the first $200 taxed at 5% and the rest $300 taxed at 15%?
Thanks. Kaamen Re: LT Capital Gain at Income Tax Bracket Boundary
Posted by: Herb (IP Logged)
Date: November 27, 2005 06:15AM
First,`assume that this is LONG TERM Capital Gain (held over more than one year).
You have the gist of the calculation, which is automatically taken care of when you file Schedule D and worksheets to calculate the total tax liability. Re: LT Capital Gain at Income Tax Bracket Boundary
Posted by: Snargle (IP Logged)
Date: November 27, 2005 12:53PM
Yes, you certainly have the gist of it, but actually I think that you'll find that it's taxable income and not AGI where the "brackets" are applied. Re: LT Capital Gain at Income Tax Bracket Boundary
Posted by: Herb (IP Logged)
Date: November 27, 2005 12:59PM
Good catch, Snargle! Yes, it is the "taxable income" boundary that we should be talking about. Overlooked that at 3 AM.
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