Will long-term capital gains be taxed in 2008?

July 8, 2005

From:  Anonymous
Date:  Wed, 08 Jun 2005

Hi--

I heard that long-term capital gains won't be subject to federal income taxes in 2008. Is that correct?

Hope you'll answer in your next newsletter.

Answer

Date:  Fri, 01 Jul 2005

Hello,

There is a very limited exclusion for long-term capital gains in 2008. It was adopted in the Jobs and Growth Tax Relief Reconciliation Act of 2003.

The zero percent rate applies for individuals in the 10% or 15% brackets. If the law applied in 2004, the maximum taxable income for a single person would be $29,050 or $58,100 for married, filing jointly.

The zero percent rate will provide a special opportunity where tax can be avoided by shifting long-term capital gains by making gifts to children over age 13. The other major beneficiaries of this provision will be retired persons with low income.

Good luck!
Mike Gray

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