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I believe I have this correct, but I will run this past the Fools on the Tax Strategies Board. As of Jan. 1, 2000, doesn't the capital gains tax go from 20% to 18% for securities held longer than 5 years. Being the "Fool in Training" that I am, wouldn't it be worth waiting 6 weeks to buy stocks in order to be included in the new capital gains rules? I figure I will hold at least 5 years.
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<< I believe I have this correct, but I will run this past the Fools on the Tax Strategies Board. As of Jan. 1, 2000, doesn't the capital gains tax go from 20% to 18% for securities held longer than 5 years. Being the "Fool in Training" that I am, wouldn't it be worth waiting 6 weeks to buy stocks in order to be included in the new capital gains rules? I figure I will hold at least 5 years. >>

You've got everything right except the date. This provision is effective for sales after 12/31/2000 of stocks with a holding period which begins after 12/31/2000.

Phil Marti
Tax Preparer
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Insufficient coffee led to premature clicking on my previous response. Instead of waiting a year, you could go ahead a buy now, then sell and rebuy 1/2/2001. You'd only have 1 year of 20% cap gains and could then begin your 5-year holding period.

Phil Marti
Tax Preparer
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<<I believe I have this correct, but I will run this past the Fools on the Tax Strategies Board. As of Jan. 1, 2000, doesn't
the capital gains tax go from 20% to 18% for securities held longer than 5 years. Being the "Fool in Training" that I am,
wouldn't it be worth waiting 6 weeks to buy stocks in order to be included in the new capital gains rules? I figure I will
hold at least 5 years.>>

In addition to the information provided by Phil Marti, you should know that I've discussed this "super long term gain" issue in the Taxes FAQ area. You should really drift on over ther to read more about it. There are VERY SPECIAL provisions on elections for "low income" taxpayers, holding periods, and other issues that should be of interest to you.

I also speak to this issue in much greater detail in my new tax book. Something that might be of interest to you.

TMF Taxes
Roy
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Instead of waiting a year, you could go ahead a buy now, then sell and rebuy 1/2/2001. You'd only have 1 year of 20% cap gains and could then begin your 5-year holding period.

Actually, you don't have to sell to gain the benefit of the super-long-term capital gain. All you have to do is choose to treat the stock as sold & repurchased on Jan 2, 2001 and pay tax for 2001 on any gain. That is, you don't have to physically sell & buy. You just tell the IRS to treat it like you did. (Save a little of money on transaction cost). Unfortunately, I can't find the deadline nor the form required--I presume they'll post a bulletin around end of 2000. My guess is the deadline is Jan 02, 2001--that would be most logical. But who had ever accused the congress of being logical?!?! Heck, the deadline might be Apr 15, 2002. . .

But to answer the original question, don't wait to buy to benefit from the super-long-term capital gain.
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Hello,

I found this thread on the board after looking over previous taxes articles about the super-long-term rates.  One of the articles mentioned that the IRS was going to have to do some rule making with regard to whether realizing a super-long-term gain would change your AGI, MAGI (or whatever the number that determines your effective tax bracket is called these days).

Has this been decided yet?  I have a retired father and a retired father-in-law who could probably structure the rest of their income flow to keep them in the 15% bracket in 2001 (with plenty of advanced planning).  This might help them reduce the tax burden on some lifetime-owned capital assets, if the super-long-capital gain itself won't bump them out of the bracket.

Thanks,
Alan Roberts
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Apologies for the formatting, the reply window
SEEMED to be wrapping lines (won't make that mistake
again).

Cheers,
Alan
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