Tax rate on 1million dollar long term capital gain

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bigwave2
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Tax rate on 1million dollar long term capital gain

Post by bigwave2 » Sun Nov 24, 2019 7:24 pm

For A 1million ltcg from a stock sale for a single person
1. Will this trigger AMT
2. Not qualify for any AMT credit
3. Not qualify for any AMT deduction
4. And be taxed at 28%
Or
Be taxed at the ltcg rate of 23%???

Just trying to determine an ez way to estimate taxes. Thanks

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Eagle33
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Re: Tax rate on 1million dollar long term capital gain

Post by Eagle33 » Sun Nov 24, 2019 8:09 pm

See the 1040 tax instruction regarding AMT.
Rocket science is not “rocket science” to a rocket scientist, just as personal finance is not “rocket science” to a Boglehead.

the way
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Re: Tax rate on 1million dollar long term capital gain

Post by the way » Sun Nov 24, 2019 9:22 pm

Eagle33 wrote:
Sun Nov 24, 2019 8:09 pm
See the 1040 tax instruction regarding AMT.
heh, yes, OP will get hit with AMT, but not on the LTCG, only on any other regular income you already have. Your AMT exclusion will be completely phased out, so say you had 100k regular income - that 100k would have been taxed in each bracket at 10-24%, but now would all be taxed at 26%. That difference is your AMT. The LTCG gets taxed the same in both cases, in brackets from 15-23.8%.

Topic Author
bigwave2
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Re: Tax rate on 1million dollar long term capital gain

Post by bigwave2 » Sun Nov 24, 2019 10:44 pm

Thanks. So how's this estimate for 100k ordinary income and 1million ltcg....
Ord Inc of 100k at 26%= 26k tax
Ltcg 357k At 15%= 53640 tax
Ltcg from 357k to 1million at 20%=128480 tax
1.1million - 200k =900k at 3.8% = 34200 health tax
Total tax estimate = 26+54+128+34 = 242k ???

Thanks

Dottie57
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Re: Tax rate on 1million dollar long term capital gain

Post by Dottie57 » Sun Nov 24, 2019 11:56 pm

bigwave2 wrote:
Sun Nov 24, 2019 10:44 pm
Thanks. So how's this estimate for 100k ordinary income and 1million ltcg....
Ord Inc of 100k at 26%= 26k tax
Ltcg 357k At 15%= 53640 tax
Ltcg from 357k to 1million at 20%=128480 tax
1.1million - 200k =900k at 3.8% = 34200 health tax
Total tax estimate = 26+54+128+34 = 242k ???

Thanks
Looks about right. Taxcaster (Intuit) says 243,680.

kaneohe
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Re: Tax rate on 1million dollar long term capital gain

Post by kaneohe » Mon Nov 25, 2019 12:44 am

and the mortgage 1040 calculator says 242,863 = Income tax:$197,915 + AMT:$10,748 + (NIIT):$34,200
https://www.mortgagecalculator.org/calc ... ulator.php

Topic Author
bigwave2
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Re: Tax rate on 1million dollar long term capital gain

Post by bigwave2 » Mon Nov 25, 2019 7:07 am

Thanks everyone!!!! That mortgage calculator .org tool is awesome!

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FiveK
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Re: Tax rate on 1million dollar long term capital gain

Post by FiveK » Mon Nov 25, 2019 2:29 pm

kaneohe wrote:
Mon Nov 25, 2019 12:44 am
and the mortgage 1040 calculator says 242,863 = Income tax:$197,915 + AMT:$10,748 + (NIIT):$34,200
https://www.mortgagecalculator.org/calc ... ulator.php
Same total as the personal finance toolbox spreadsheet. $5 difference on the non-AMT, cancelled by an opposite $5 on the AMT adder, so the AMT calculations must agree.

The mortgagecalculator tool seems the best of the web-based ones. Either the above spreadsheet or the Excel1040 one are good for spreadsheet preferrers.

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grabiner
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Re: Tax rate on 1million dollar long term capital gain

Post by grabiner » Wed Nov 27, 2019 11:26 am

bigwave2 wrote:
Sun Nov 24, 2019 7:24 pm
For A 1million ltcg from a stock sale for a single person
1. Will this trigger AMT
2. Not qualify for any AMT credit
3. Not qualify for any AMT deduction
4. And be taxed at 28%
Or
Be taxed at the ltcg rate of 23%???
AMT taxes capital gains at the same rate as the regular tax, so the long-term gain cannot be taxed at 28% under AMT.

If you do owe AMT, part of a capital gain may be taxed at 25.8% (22% plus the 3.8% Net Investment Income Tax) because the AMT personal exemption phases out at a rate equivalent to a 7% marginal tax; beyond that point, the AMT rate goes back to the regular rate.

This phase-out makes it possible, but not common, for a capital gain to trigger AMT. Usually, you only owe AMT if you have other tax advantages from the regular tax which are disallowed under AMT.

Whether the stock sale qualifies for an AMT credit depends on the nature of the transaction. The AMT credit applies if the same income would be taxed in different years under the AMT and regular tax, which might happen if the stock was purchased with an incentive stock option and sold in a later year. In that situation, the tax on this year's sale would be much less than the normal tax, because a lot of the tax was already paid under AMT in a previous year.
Wiki David Grabiner

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