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URL:  http://boards.fool.com/writer1222-writes-pardon-my-lack-of-12836781.aspx

Subject:  Re: Capital Gains and Tax Bracket question Date:  7/2/2000  12:24 PM
Author:  Bob78164 Number:  37091 of 121220

writer1222 writes:

Pardon my lack of knowledge....but I was wondering how I go about figuring out my tax bracket for capital gains tax. The problem is I don't have an earned income as I resigned from my job earlier this year. So do I base the tax bracket on the amount I will receive by selling my stock?

I reply:

Welcome to the boards! First, let me address something I find confusing. If you resigned from your job earlier this year (2000), then I imagine you will, in fact, have earned income to report on your 2000 tax return.

Be that as it may, you compute your capital gains rate by stacking your capital gains on top of your ordinary income. If your ordinary income is zero, then it's zero. Schedule D, which is available at the IRS Web site ( www.irs.gov/forms_pubs/forms.html ), will walk you through the calculation. The bottom line, though, is that your short-term gains will be taxed as though they were ordinary income. Long term gains will be taxed at 10% until the 15% bracket is "filled up"; any long term gains beyond that point will be taxed at 20%. Good luck! --Bob
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