will the long-term capital gains rate remain in law for 2021

Home Fairmark Forum Taxation of Investments will the long-term capital gains rate remain in law for 2021

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  • #71035
    TaxationRobbers
    Participant

    If you sell in 2021 a stock you’ve held for one year, will you be taxed at the lower long-term capital gains rate?

    I read that it would be unconstitutional and struck down in the courts if Biden attempts to try to make his still-unpassed elimination of long-term capital gains rates retroactive for 2021.

    #71036
    Kaye Thomas
    Moderator

    Congress has never enacted a tax law that is retroactive in the way you indicate, so we don’t have a definitive answer to the question whether it would be unconstitutional. Language in at least one Supreme Court opinion suggests that Congress would be unwise put this issue to the test, and it seems unlikely that this Congress or any other will ever do so. If the proposal to eliminate lower rates for long-term capital gains becomes law, it will have a prospective effective date, though not necessarily from the date of enactment. My guess is that it would be effective from the date the legislation is approved by the House Ways and Means Committee, on the theory that this action places taxpayers on notice about the change.

    #71038
    dienerte
    Participant

    TaxationRobbers – For taxation at the long-term capital gains rate make sure the sale is one year and one day, otherwise one year would be a short term gain and taxable at the marginal tax rate.

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