- quote -

There is a cap, since the 0% rate applies only to capital gain income that
would ordinarily fall within the 10% or 15% tax brackets. To see how this
will work, take the "Qualified Dividends and Capital Gain Tax Worksheet" on
page 35 of the 2007 1040 instructions, and substitute 0% for the 5% shown on
line 11.

Complicating your example is the fact they can probably exclude $500,000 of
that gain, but the remaining capital gain will also make 85% of their Social
Security taxable.

--
Don EA in Upstate NY

--
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"joetaxpayer" <joetaxpayer[at]nospam.com> wrote in message
news:CP-dnUE-UsCgwgzanZ2dnUVZ_oaonZ2d[at]comcast.com...
- quote -

So if an elderly couple is living with income at the poverty line but has a
$2M one-time capital gain on sale of their primary residence, they can take
the entire $2M free of Federal capital gains? Or is there a cap on the
amount that will qualify for the 0% rate?

--
Will


- quote -

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"DORFMONT[at]aol.com (Linda Dorfmont)" <DORFMONT[at]aol.com> writes:

- quote -

True.

- quote -

Not true. It remains at 15%.

- quote -

The Jobs and Growth Tax Relief Reconciliation Act of 2003 and the Tax Increase
Pevention and Reconciliation Act of 2005.

--
Rich Carreiro rlc-news[at]rlcarr.com

--
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DORFMONT[at]aol.com (Linda Dorfmont) wrote:

- quote -

I don't understand how the two are related. If they are upside-down on
the mortgages, how do they still have a capital gain? Did they just keep
pulling money out?

The new rates do not include a 5% rate as you suggest above.
If your tax rate is 10 or 15%, you have a 0% cap gain rate. 25% or
higher bracket still see a 15% rate.

The law was JOBS AND GROWTH TAX RELIEF RECONCILIATION ACT OF 2003
(JGTRRA) of course. A link to the details is
http://www.cffp.edu/portal/alias__Ra...6/Default.aspx

Some amateurs out there will guess it was part of the Pension Protection
Act of 2006, which contained a myriad of other changes to the tax code.
Their accountant needs to read more.

JOE

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<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

I have been doing a number of distressed disposition analyses for
taxpayers who are upside down on their mortgages. I recently met with
a family who has several rental properties in this situation. I
mentioned to them that this year and for the next 3 years the capital
gains rate goes to zero for people in the 10 - 15% bracket, and for
those above it is 5%.

They spoke with their regular accountant and their attorney. Neither
of these people had heard of the change to the capital gains rate. I
heard about it several years ago when it was first passed but forgot
until reminded at a seminar last week.

Could somebody give me the law and year it was passed that made this
change?

I am warning them that it could be changed again depending on the
election results so don't count on any more lower rate after 2008.

Linda Dorfmont E.A., CFP, CSA

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >