Hi & thanks for reading...I am attempting to fill out my first Schedule D. I only have two entries 1) the sale of some stock in a company purchase plan (short-term and know the cost basis) 2) the sell of 24 shares when MetLife demutualized. Although the shares were issued in April 2000, it is my understanding that this is to be filed as a long term capital gain since you use the date the policy was issued as the acquired date...so in my case this is over 12 months -> long term gain. Ths cost basis appears to be 0 so I included the sum of the short and long term gains (line 17 of Schedule D) on 1040 line 13. Everything so far makes sense...now for the black magic. Apparetnly, if both your short term and long term are gains and you have taxable income (1040 line 39 > 0) then you can proceed to part 4 of Schedule D. Line 29 is where it gets interesting, here it seems that basically I can reduce my taxable income if it is greater than 43,850 for married filing jointly...and then you take 20% of the long term gain and add it to the tax of 43850. Eventually this ends up on 1040 line 40!!! Now if this is correct...what a savings I need to have long-term captial gains every year! Anyway, without having the forms and details in front of you does this sound right? I mean can a small long term captial gain significantly reduce you taxable income in this manner?Thanks.
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