Capital gains tax holiday

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Will congress change tax law in 2008?

Poll ended at Sat Jun 30, 2007 12:42 pm

yes
21
54%
no
18
46%
 
Total votes: 39

Topic Author
Gordon
Posts: 331
Joined: Tue Feb 20, 2007 4:56 pm
Location: Lake Havasu City, Arizona

Capital gains tax holiday

Post by Gordon »

What are the odds that there will be no long term capital gains tax for the years 2008-2010?
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jimgour
Posts: 243
Joined: Sun Mar 04, 2007 9:31 pm
Location: New Mexico

Two Possiblities

Post by jimgour »

Two:

Slim

None
xenial
Posts: 2704
Joined: Tue Feb 27, 2007 1:36 am
Location: USA

Re: Capital gains tax holiday

Post by xenial »

Gordon wrote:What are the odds that there will be no long term capital gains tax for the years 2008-2010?
The question is a little misleading. You pay no long term capital gains tax for the years 2008-2010 only if your income, including long term capital gains, is low.

Best wishes,
Ken
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alvinsch
Posts: 1612
Joined: Mon Feb 19, 2007 10:16 pm
Location: Northwest

Post by alvinsch »

Bit hard to answer since you've asked two different questions.
Will congress change tax law in 2008?
No, at least as it pertains to CG tax rates because I believe it would be vetoed by the current president.
What are the odds that there will be no long term capital gains tax for the years 2008-2010?
In 2009 we will have a new president and congress so I believe the tax system may be changed dramatically in 2009 which would become effective in 2009 or 2010.

The 0% CG/QDI tax bracket only applies at lower income levels (total taxable income including CG/QDI below top of 15% bracket), so it's hard to predict since many democrats want to raise taxes on the "rich" while increasing the tax breaks for the "poor". Many republicans don't want any taxes to be raised so one could argue they both would want it to continue for lower incomes. So I believe it may continue for some but not likely for many of us since the lower CG/QDI (whether 0% or 10%), is phased out with income level.

Just my two cents.
- Al
Wagnerjb
Posts: 7203
Joined: Mon Feb 19, 2007 8:44 pm
Location: Houston, Texas

Re: Two Possiblities

Post by Wagnerjb »

jimgour wrote:Two:

Slim

None
And I think Slim just walked out the back door....
Andy
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joe8d
Posts: 4446
Joined: Tue Feb 20, 2007 8:27 pm
Location: Buffalo,NY

Wishful Thinking

Post by joe8d »

Wouldn't it be great if they allowed you to move the entire amount from the sale of a stock fund to another in say 31 days without incurring Cap Gains tax. Similar to way they used to tax treat the sale of a principal residence
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paulob
Posts: 1408
Joined: Tue Feb 20, 2007 7:54 am

Post by paulob »

I voted no. Who in their right mind would pass tax legislation eliminating a middle class loophole this close to the election?
Paul
DickBenson
Posts: 809
Joined: Sun Apr 08, 2007 7:27 pm

How does this work?

Post by DickBenson »

In 2008, if you have 5000 in capital gains, and are in the 10% (15%?) tax bracket, my understanding is that you will pay no tax on that 5000.

If you add another 100 in CG, and this moves you into the next tax bracket, will all that 5000 become taxable?

Dick
earlyout
Posts: 1436
Joined: Tue Feb 20, 2007 5:24 pm

Re: How does this work?

Post by earlyout »

DickBenson wrote:In 2008, if you have 5000 in capital gains, and are in the 10% (15%?) tax bracket, my understanding is that you will pay no tax on that 5000.

If you add another 100 in CG, and this moves you into the next tax bracket, will all that 5000 become taxable?

Dick
My understanding of the current situation (all subject to change of course):

A tax rate of 0% will apply to long term capital gain that fits between your other taxable income and the top of the 15% bracket in 2008 - 2010. Any additional capital gain will be taxed at the long term rate of 15%.

In 2008 the top of the 15% bracket for MFJ is about $65,000 so if you have no other taxable income you would not pay any income tax on the first $85,000 of long term capital gain (assuming deductions and exemptions for the MFJ couple are $20,000).

EO
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