## Tax rate on 1million dollar long term capital gain

Non-investing personal finance issues including insurance, credit, real estate, taxes, employment and legal issues such as trusts and wills
Topic Author
bigwave2
Posts: 9
Joined: Thu Jan 17, 2013 10:54 pm

### Tax rate on 1million dollar long term capital gain

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

Eagle33
Posts: 307
Joined: Wed Aug 30, 2017 3:20 pm

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

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
Posts: 58
Joined: Sat Oct 26, 2019 6:00 pm

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

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
Posts: 9
Joined: Thu Jan 17, 2013 10:54 pm

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

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
Posts: 7556
Joined: Thu May 19, 2016 5:43 pm
Location: Earth Northern Hemisphere

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

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
Posts: 6030
Joined: Mon Sep 22, 2008 12:38 pm

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

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
Posts: 9
Joined: Thu Jan 17, 2013 10:54 pm

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

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

FiveK
Posts: 8066
Joined: Sun Mar 16, 2014 2:43 pm

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

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.

grabiner
Advisory Board
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Joined: Tue Feb 20, 2007 11:58 pm
Location: Columbia, MD

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

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.
David Grabiner