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URL:  http://boards.fool.com/question-1-if-our-earned-income-next-year-is-15631263.aspx

Subject:  Re: LTCG Rates for 2002 Date:  8/24/2001  11:45 PM
Author:  irasmilo Number:  53557 of 121061

Question #1: If our earned income next year is $15K (married filing jointly) and we include the LTCG of $160K, how will the LTCG rates apply? Will we get the 8% rate on part of it up to total income of $43850 (or whatever it is next year) and then 20% on the remainder?


Your thinking is basically correct, but needs a little tweaking. First, you will only qualify for the 8% LTCG rate if you owned the property for 5 years before selling. If less than 5 years, you'll pay 10% LTCG up to the upper limit of the 15% tax bracket and then 20% on the remainder. Second, the upper limit ($43850 or whatever) is based on taxable income, not total income. You need to consider adjustments, deductions, and exemptions.

Ira
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