Message Font: Serif | Sans-Serif
 
UnThreaded | Threaded | Whole Thread (5) | Ignore Thread Prev Thread | Prev | Next | Next Thread
Author: luke77 Three stars, 500 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 121188  
Subject: Deductions on capital gains? Date: 10/25/2013 6:32 PM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 0
Hi all,

I have two questions about the tax treatment of capital gains. I returned to school this year to complete a graduate degree, meaning that I have zero income for the year. However, I have about $100K in unrealized long-term capital gains that I am thinking of selling, partly because I think that my capital gains taxes would be lower given that I have no income. I'm unsure, though, about a few things regarding how the capital gains would be treated.

I've read that your capital gains rate depends on your tax bracket - the 10 and 15 percent bracket has a zero percent rate for LT gains, and all other brackets have a 15% rate. I'm wondering, though, do the capital gains themselves raise one's tax bracket? Since I would have $100K in gains, would this bump me up to the 33% (or whatever) tax bracket, and thus raise my capital gains rate to 15%? Or are capital gains treated entirely separately from income, and my tax bracket would be the zero percent bracket?

Along those lines, can I reduce my tax burden on capital gains the same way I would be able to with income, through charitable giving? In other words, if I have a capital gain of $100,000 and I give $25,000 to charity, can I deduct this from the capital gain so that I am only taxed on $75,000? Or are you only allowed to deduct from ordinary income?

Thanks!
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Print the post  
UnThreaded | Threaded | Whole Thread (5) | Ignore Thread Prev Thread | Prev | Next | Next Thread

Announcements

Disclaimer:
In accordance with IRS Circular 230, you cannot use the contents of any post on The Motley Fool's message boards to avoid tax-related penalties under the Internal Revenue Code or applicable state or local tax law provisions.
Managing Your Wealth
Our own TMFHockeypop from Rule Your Retirement fame on the TV show Managing Your Wealth.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Post of the Day:
Value Hounds

Back to the Future Buffalo Wild Wings
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
Community Home
Speak Your Mind, Start Your Blog, Rate Your Stocks

Community Team Fools - who are those TMF's?
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and "#1 Media Company to Work For" (BusinessInsider 2011)! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.
Advertisement