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URL:  http://boards.fool.com/i-am-considering-some-profit-taking-and-could-do-30113720.aspx

Subject:  Re: Capital Gains: This year or next? Date:  6/24/2012  5:00 PM
Author:  TMFPMarti Number:  116338 of 121338

I am considering some profit taking and could do it this year or next. The rub is that my income is very low, which would put me in the 10% bracket (right?).

You'll find the brackets as well as a worksheet to help you determine taxable income in Form 1040-ES.

Is capital gains capped at 15%, or would mine be lower, at my income bracket. (10%).

For 2012 long-term cap gains are not taxed at the Federal level for those in the 15% bracket or below. The max rate for all others is 15%. Short-term cap gains are taxed as ordinary income.

Assuming the tax cuts expire, would I pay 20% on my cap gains next year, or would my capital gains be taxed at my ordinary income rate of 10%?

I feel confident predicting that long-term cap gains will not be taxed at a higher rate than ordinary income unless you have a lot of them. (I think the surtax on investment income above $250,000 kicks in next year.) I'm less confident in saying what the limits for LTCG will be. I think it's 10% and 20% for the two groups which are currently zero and 15%, but there was that "super" LTCG stuff that was around at one time, and I don't know whether that was repealed or not.

With the climate in Washington I don't pay attention until mid-November.

Phil
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