Here is a quirk in the rules about benefitting from LTCG reduced tax rates. Did a preliminary preparation of 2001 taxes. With 7K LTCG included with pension and other income my social security income is taxable (at about 65% of the SS amount). If I add another 4K in LTCG 85% of SS is taxed. The total tax increase comes to about 25% of the 4K LTCG (if added this year). Also this is my year for medical deductions so the increase of 4K reduces that deduction (by about $75). If I wait until next year to take LTCG the differential in taxes will be 10 or 15% of LTCG (no itemization and 85% of SS will be taxable because of increase in other income). So much for LTCG tax benefit for the little guy on limited pensions and SS income.
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