No. of Recommendations: 2
This is true if your income isn't high enough to push you into alternative minimum taxes. I just plugged in some fictitious numbers into Turbo Tax and my tax rate on long term capital gains would be 23% (we are subject to AMT).

Techncially, that's not correct. The 15% rate on long term capital gains applies to the AMT as well.

However, adding the additional income from the gain can wreak havoc all over your tax return. It can add to your taxes by affecting:
passive activity losses (i.e. rentals),
how much of your social security benefits are taxable,
your itemized deductions for medical expenses, casualty losses, and miscellaneous deductions,
various phaseouts all over the place,
and several other things as well.

The bottom line affect can indeed be an increase to taxes that is larger than the 15% rate on the capital gain.

--Peter
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