PattyHop writes:Help! My S.O. and I are receiving a large sum of $$$ (read high 6 figures) due to the sale of a business that my hubby owned "phantom" stock in. I have heard that this might mean a tax rate (CA and fed) of up to 50% and that we will not be able to itimize any deductions this year. Please, say it ain't so! Anyone?I replyWelcome to the boards!What's "phantom" stock? Without knowing that, all I can do is give you some general numbers. If the money is taxed as ordinary income (rather than long term capital gain), your marginal federal tax rate will be 39.6%. Either way, your marginal state tax rate will be 9.3%. I believe you will lose most or all of your personal exemption as well -- check out the instructions to Form 1040. Your itemized deductions will be sharply limited, but not completely eliminated, and your state tax bill will surely be a substantial itemized deduction.On the other hand, half of high six figures is still medium six figures, which is nothing to sneeze at. Just make sure you pay estimated taxes or qualify for a safe harbor. Congratulations, and good luck! --Bob
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