The Capital Gains Blog

Archive for December, 2007

Reporters’ notes: State of the union address

President Barack Obama used his first State of the Union address to focus on the tough domestic issues facing the US as it emerges from recession. Here is a full transcript of his speech, with notes from the BBC’s Mark Mardell and Paul Reynolds

Question: Capital Gains Tax due when moving from state to state?

Assume someone sells some captial asset and realizes a short-term capital gain on 1/1/07 while living in a state with an income/STCG tax rate of 10%. On 4/1/07, they establish residence in a no-tax state (e.g. Florida). Assuming they have no other income in that year, and ignoring all deductions, etc, how much state tax is due to the first state on this gain? The full 10% or a pro-rata rate based on the time this person spent in each of the states during the calendar 2007?

Answer: You will owe the whole tax for whatever transactions took place while you lived in that state. If you had sold the asset after you moved to the no-income-tax state, you wouldn’t owe anything.

GOP win in Mass. jolts Obama plans

Not in decades has the election of a single new senator Scott Brown caused such an upheaval in the capital’s political calculations.

Question: Selling, is it income or Capital Loss (tax return)?

I’m selling my textbooks from the semester on amazon and was wondering how this would count on my tax return. Would it be part of net income, or could it be short term capital loss? Or does it even matter, and should I just forget about it?

Answer: I assume you did not use a tax credit or deduction when you purchased the books.

You are selling your personal property. You are not in the business of selling books, and the money you get will not be more than you paid for your books.

The money received is not income for purposes of the income tax return.

Short answer: Yes, you can just take the money and forget about it on your tax return.

Matt Reed: 10 ugly truths about our politicians

Our state capital has its own rules of engagement. Like waiting to act on a problem in our public schools until no one can avoid the crisis. Or cutting business taxes by a dollar, only to hike fees and insurance costs by two.

Services

Martin Hawes: Buy into the real business

There is now little doubt that taxation rules for residential property investment will change and that we will not see another residential property boom for a while.With rental yields low and little prospect of capital gain, many…

Question: Tax Question: Long Term Capital Gains and AGI?

Ok, I know that long term capital gains are taxed at different rates than ordinary income. But I’m wondering how the mechanism actually works, since they are part of the AGI. How do you get to you tax liability?

Simpified example: Say your ordinary income is 50,000 (ignoring all deductions, exemptions, etc..). In addition, you have 10,000 of capital gains. So you go through the calculation, do you get an AGI of 60,000? But then do you separate the two amounts again and apply different tax rates to them?

Answer: The LTCG rate is based upon your marginal bracket, not your AGI. While your AGI is involved in getting to your marginal bracket, exemptions and deductions also come in to play. Therefor your marital status and number of dependents figures in as well.

To further complicate matters, the rate is determined by your marginal bracket INCLUSIVE of the gain. To figure that requires some external calculations. You figure your taxable income exclusive of the LTCG then add the LTCG and take that number to the Tax Rate Schedule for your filing status to figure your marginal bracket for LTCG purposes.

If your inclusive marginal bracket is higher than 15%, the LTCG rate is 15%. If your marginal bracket is 15% or lower then the reduced rate applies to the LTCG. For tax years 2009 and 2010 the reduced rate is 0%. It returns to the standard reduced rate of 5% in tax year 2011.

Teck Reports Fourth Quarter Results for 2009

VANCOUVER, BRITISH COLUMBIA–(Marketwire – Feb. 8, 2010) – A