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URL:  http://boards.fool.com/ok-one-last-time-the-capital-gains-are-counted-22398258.aspx

Subject:  Re: is long term cap gains income? Date:  4/24/2005  12:47 AM
Author:  lorenzo2 Number:  78927 of 121185

Ok, one last time. The capital gains are counted as part of my income, but are taxed at a separate rate (15% in this case). The fact that it's still counted as part of my income is important because it may disqualify me from contributing to a Roth IRA or other benefits that are have specific income limits.

Right. As Bob78164 correctly notes, it's not necessarily as simple as saying your tax will increase by 15% of your LT capital gain - other things, like phaseouts, may come into play.

Also as Bob78164 notes, the best way to see what happens is to run some numbers. Take your just-concluded tax return, add in $10,000 (or whatever is appropriate) in LT cap gains, use the Sched D worksheet to work out your tax, and see what the result is. Just be aware that some things (like itemized deductions or credits) may change because your AGI is larger.

Lorenzo


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