Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : Income Taxes and Record Keeping ( tax ) -- Ignore unavailable to you. Want to Upgrade?

To: Maywood who wrote (2106)	4/1/1999 10:53:00 AM
From: Brendan W	Respond to of 5810

Maywood, my CPA told me that I paid AMT last year on my long-term capital gains.

To: Maywood who wrote (2106)	4/1/1999 11:18:00 AM
From: Spots	Read Replies (1) \| Respond to of 5810

AMT and cap gains. I actually went through this last December to decide whether to take some gains (didn't, should've :( ). You're right, the form is a stinker, even by IRS standards. In a nutshell, you do in fact pay only 20% on long term gains. Sort of. They are actually exempt from the AMT, again sort of. What happens is that they count toward AMT far enough to remove all of your personal exemptions, many itemized deductions, all the low tax brackets, and other "preference" items that AMT is supposedly out to get. I don't recall the deduction break down -- you don't lose everything, and it seems to me the standard deduction is a lower limit. After that hit, the gains themselves are taxed at 20%, but you then end up paying whatever the AMT rate is on everything els The upshot is, at some point (just about 300,000 if my recollection is correct), you really do start paying a marginal 20% rate on long term gains, and above that on an unlimited amount of gains. Up to that point the effective marginal rate is higher because the higher your income the more deductions, etc, you lose on a sliding scale as they become subject to AMT. I verified this with my lawyer, who tells me it's new with the tax reform act last year, btw. Watch out for an AMT whammy on employee stock options, though. Details vary with the option. Spots