Zero % capital gains stunner

[taxmom34]

i got one too!

and i had to go over and over the schedule D and read tax book, and client had savings of over $700. this was an installment sale too. nice to be able to tell client that some changes were helping him. and it's good next year and 2010 too if i'm reading this right

[RitaB]

So nice that people on here

don't have to show off. You know, the atmosphere here is helpful. Even when someone disagrees (or I'm just flat out wrong), nobody has to be a jerk about it. I really appreciate that; I was the kid in high school that just worried all the time that somebody didn't like me... I still kinda do that.

Anyway, nice to have good help at the office! Thanks, friends!

[Gretel]

I know what you mean. It always feels so good to have a problem on your desk and you read TTB and someone just received a response to the same problem.

[BP.]

my first inclination was to post to get some confirmation

Well, go with your gut, Girl, ya know we wanna hear from you!!

[Gretel]

Yep, yep. Had the same thing twice and my first inclination was to post to get some confirmation. But then I was pretty sure that this is the way it works out. What a delight for some people!

[RitaB]

Yep, it's true

http://www.nysscpa.org/cpajournal/2006/1206/essentials/p40.htm

Looks like both your examples are ordinary folks getting a break. Nice.

[BP.]

Wonderful good timing for this client

You got that right! The client was $#!**!@& himself, and even proposed marriage to me in his irrational exuberance!

[DaveO]

I hope it's true. I had one similar to what you describe that resutled in $0 tax on a $50k gain. Even better was the fact that in NE if you have a lower Federal tax than the state tax you pay the Federal tax and attach the Federal return (subject to certain midifcations of course).

In this case it was from the early payoff of an installment sale. Wonderful good timing for this client as they are in the construction trade and had a terrible year otherwise.

[BP.]

This is in the category of too good to be true --- which is why I'm second guessing here. Well, that and my own senility.

MFJ taxpayer has taxable income of $74,000. Of that, $51,000 is a capital gain from one sale. That means his ordinary taxable income is $23,000, which puts him in the 15% bracket. Which means his capital gain is taxed at 0%. Considering economic conditions, I haven't seen a capital gain this year this high, so this is my first really good look at the dramatic impact the 0% rate can have.

I have combed over the Schedule D tax worksheet, and it all looks fine, but as I said --- too good to be true?? Thanks for any input!

Barbara