2008 Capital Gains

[Wisconsin guy]

I have a client that is a farmer. He heard that in 2008 the long-term capital gain rate is 0%. I think I heard a little about that too, but nothing definite. Anyway, he was wondering if that was true, and if he sold his cows that year, would that qualify for the 0% rate?

Thanks in advance for any help.

[Unregistered]

2008 capital gain

Last years QF page 7-4 Future changes to capital gain tax rates:
For tax years beginning in 2008, the 5% maximum capital gain tax rate (for taxpayers in the 10% or 15% tax brackets) will drop to 0%

[Bees Knees]

I have a client that is a farmer. He heard that in 2008 the long-term capital gain rate is 0%. I think I heard a little about that too, but nothing definite. Anyway, he was wondering if that was true, and if he sold his cows that year, would that qualify for the 0% rate?

If his cows are inventory, the gain is taxed as ordinary income, subject to SE tax. If they are depreciable assets, they are subject to depreciation recapture at ordinary income tax rates, not subject to SE tax. Only the appreciation in excess of depreciation allowed would get the 0% capital gain rate (provided he is in the 10% or 15% tax bracket).