Zero % capital gains stunner

[RitaB]

Here's one that bugs me

[QUOTE=joanmcq;79203]It depends on what other income there was. The ones I've seen (like the one I had today) are elderly with boucoup qualified dividends and some capital gains. I mean we are talking people with assets enough to generate 50k + in qualified dividends with a bit of LT cap gains thrown in. And social security. Tax: zero. The standard deduction wiped out the taxable portion of SS (13K) and how much in assets do you have to have to generate 50k in dividends?

Someone thought this out really well. But at first you think your software has a serious bug....[/QUOTE



Got a contractor here, that sells his principal residence (that he builds) every two years and avoids the tax on $100,000 or so. Of course, he's entitled to do that, and would be stupid not to, if he's willing to move every two years.

But, then there's the little couple that makes $100,000 selling the residence they've lived in 20 years. That's cool. Guess life (and taxes) aren't always fair...

Don't get me started on housing allowance... I love my pastor, but when he starts in on "how much I pay in taxes" he gets no sympathy here.

Edit: What am I doing wrong that the word "quote" is printed, instead of it looking the cool way everybody else does it?!

[BP.]

Got a contractor here, that sells his principal residence (that he builds) every two years and avoids the tax on $100,000 or so. Of course, he's entitled to do that, and would be stupid not to, if he's willing to move every two years.

But, then there's the little couple that makes $100,000 selling the residence they've lived in 20 years. That's cool. Guess life (and taxes) aren't always fair...

Don't get me started on housing allowance... I love my pastor, but when he starts in on "how much I pay in taxes" he gets no sympathy here.

Edit: What am I doing wrong that the word "quote" is printed, instead of it looking the cool way everybody else does it?!

Don't understand the bug --- little couple's $100,000 profit on the house they lived in 20 years is tax free, right? Is there an end bracket missing on your final word "quote" --- maybe that will get your quote to look the way you want?

[RitaB]

I'm trying the quote again

Don't understand the bug --- little couple's $100,000 profit on the house they lived in 20 years is tax free, right? Is there an end bracket missing on your final word "quote" --- maybe that will get your quote to look the way you want?

Thanks for the tip on the missing bracket.

(I'm happy for the little old couple, BTW.)

[LindaK]

[QUOTE=
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%.

Barbara[/QUOTE]

In this original post, the TI is high enough to get to the next bracket as well. BP, did some of that gain get taxed at 15%?
Linda

[RitaB]

Been thinking...

Someone thought this out really well. But at first you think your software has a serious bug....

The folks in Washington who pass the tax laws have pretty good earned income, so how would they be looking out for themselves on this particular issue? I don't see them getting the advantage of the 0% LT rate. I also don't see how this is benefiting one particular voting block to the exclusion of another... Am I missing something?

[BP.]

In this original post, the TI is high enough to get to the next bracket as well. BP, did some of that gain get taxed at 15%?
Linda

Linda, the total TI is, but the CG of $51,000 was beneath the top end of the 15% bracket, and the remaining TI was also within the 15% bracket, so no 15% on any of the CG.

[taxxcpa]

Zero bracket for capital gains

I just did one with the same situation. They ended up with a complete refund of all WH tax and lost their EIC since the income was too high. Since I am an anti-EIC fan, I was pleased by the results.

[RitaB]

Yay!

I just did one with the same situation. They ended up with a complete refund of all WH tax and lost their EIC since the income was too high. Since I am an anti-EIC fan, I was pleased by the results.

I'm not an EIC fan, either. I think that's a lot worse injustice than zero capital gains tax rate for folks in the 15% tax bracket. Anybody with long term investments might possibly benefit from a break on capital gains tax. I know lots of people who have never made it out of the 15% bracket who are able to buy some mutual funds, sell a lot they inherited from Granny five years ago, etc.

I was just thinking, if the EIC people would invest that fat "refund," when the market recovers, they would have investment income and not qualify for EIC anymore. So, maybe this is a trick to get rid of EIC. Haha!

I had a client that got EIC every year, and SOMEHOW (ahem) had enough money to buy a rental house, made just enough to blow his EIC. Didn't ask me first, and I'm sooo glad. Bet that rental will be a real flat tire for 2009...

[PIGLEE]

I have had several people that had capital gains, this year, and came in wanting to do an installment sale, to save taxes. It actually turned out that paying the tax on the whole thing resulted in a -0- tax. No installment sale, no possible tax in future years. Great tax break, I looked great. But I don't get to charge for 6252 for several years. Oh well. I like making people happy.