In article <96976230-b1e7-4461-bd96-8e3ff4340a24[at]q24g2000prf.googlegroups.com> ,
removeps-groups[at]yahoo.com <removeps-groups[at]yahoo.com> wrote:
- quote -


I wouldn't use that. I would calculate based on modifying the worksheet
in order to not pay any more tax when applying the 15% rate to LT gains
and Q.D. and then disclose this recalculation of a few bucks on form
8275.
--


ArtKamlet at a o l dot c o m Columbus OH K2PZH

--
<< ------------------------------------------------------- > << 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. > << ------------------------------------------------------- >

On Apr 27, 5:19 pm, kam...[at]panix.com (Arthur Kamlet) wrote:

- quote -

Line 18 and line 19 are not sufficient to generate the lower tax.
Turns out my example is too simplistic; the real scenario has several
thousand dollars of qualified dividends and long term gains. Line 18
asks you to compute the tax on your entire taxable income using the
tax table. This means that all the qualified dividends and long term
gains (several thousand dollars) would be taxed at ordinary income
rates, which is roughly 25% in my scenario -- the person's salary
alone puts them in the 25% bracket. So I want the 15% rate for these
qualified dividends and capital gains. It's just the single capital
gain of $35 that I want to be treated as short term. Is it possible
by section 163?

--
<< ------------------------------------------------------- > << 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. > << ------------------------------------------------------- >

In article <64683d65-270d-445a-9201-06e8d809df7c[at]1g2000prg.googlegroups.com> ,
removeps-groups[at]yahoo.com <removeps-groups[at]yahoo.com> wrote:
- quote -


I see no obstacle to foregoing long term rates in favor of
short term rates, but I am not convinced from your example
that it is needed here. See my other message on the
qualified dividend and capital gain workseet lines 18 and 19.
--


ArtKamlet at a o l dot c o m Columbus OH K2PZH

--
<< ------------------------------------------------------- > << 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. > << ------------------------------------------------------- >

In article <1763e4c0-07de-45c4-b4aa-1ec6966f3a68[at]u12g2000prd.googlegroups.com> ,
removeps-groups[at]yahoo.com <removeps-groups[at]yahoo.com> wrote:
- quote -


See lines 18 & 19 of the Qualified Dividends and Capital Gains
Worksheet on page 35 of the Form 1040 instructions.


Line 18 asks you to figure the tax on your taxable income without
taking into account any special lower rates. Line 19 asks you to
choose the lower of line 18 or your tax calculated with the lower
tax rate applied.
--


ArtKamlet at a o l dot c o m Columbus OH K2PZH

--
<< ------------------------------------------------------- > << 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. > << ------------------------------------------------------- >

On Apr 7, 1:17 pm, "removeps-gro...[at]yahoo.com" <removeps-
gro...[at]yahoo.com> wrote:

- quote -

I just remembered, one can elect to treat long term capital gains as
short term. Is this true in general, or only for the purpose of
increasing the investment interest deduction (ie. maximum allowsable
investment interest deduction is the sum of interest, ordinary
dividends, short term gains - hope I wrote the rule right).

http://www.taxalmanac.org/index.php/Sec._163._Interest

--
<< ------------------------------------------------------- > << 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. > << ------------------------------------------------------- >

On Apr 7, 1:31 pm, "Phil Marti" <prm20...[at]verizon.net> wrote:

- quote -

I don't like the idea of choice as it further complicates the tax code
and compliance. But in the future, probably all returns will be
eFiled, so then they would always use the calculation as the computer
would do all the work.

--
<< ------------------------------------------------------- > << 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. > << ------------------------------------------------------- >

On Apr 7, 7:17 pm, Barry Margolin <bar...[at]alum.mit.edu> wrote:

- quote -

Yes, you make a good point. In any case, the $0.10 would be rounded
down to $0.

--
<< ------------------------------------------------------- > << 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. > << ------------------------------------------------------- >

In article <gdAKj.938$NM.585[at]trnddc01> ,
"Phil Marti" <prm20871[at]verizon.net> wrote:

- quote -

Too bad.

Anyway, going back to my earlier point about the fact that it's a crap
shoot, the likelihood that you'll be screwed by the tax table is
inversely proportional to the amount you'll be screwed. If the check
had been $1, there's a 98% chance of staying in the same $50 range, but
the difference between income and capital gain tax on that $1 would only
be about a dime.

--
Barry Margolin, barmar[at]alum.mit.edu
Arlington, MA
*** PLEASE don't copy me on replies, I'll read them in the group ***

--
<< ------------------------------------------------------- > << 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. > << ------------------------------------------------------- >

"Barry Margolin" wrote:

- quote -

I have the same recollection of back when the earth was cooling. However
under current law you must use the Tax Tables if taxable income is less than
$100,000..

--
Phil Marti
Clarksburg, MD

--
<< ------------------------------------------------------- > << 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. > << ------------------------------------------------------- >

In article
<1763e4c0-07de-45c4-b4aa-1ec6966f3a68[at]u12g2000prd.googlegroups.com> ,
"removeps-groups[at]yahoo.com" <removeps-groups[at]yahoo.com> wrote:

- quote -

On the other hand, if their income had been $50,051 with the $35
included, your regular tax would drop by $50*marginal rate and the
capital gain tax would increase by $14*15%, so you would get a
significant saving. Using the granular tax tables tends to magnify some
small income differences and ignore others, depending on the luck of
whether you cross one of the $50 boundaries. In the case of a $35
check, you have a 70% chance of winning, 30% chance of losing.

I vaguely recall that when I used to do my taxes by hand (about 25 years
ago, before Macintax) that you could actually choose whether to use the
tax table or calculate the percentage exactly. Am I misremembering? Is
this still allowed?

--
Barry Margolin, barmar[at]alum.mit.edu
Arlington, MA
*** PLEASE don't copy me on replies, I'll read them in the group ***

--
<< ------------------------------------------------------- > << 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. > << ------------------------------------------------------- >

<removeps-groups[at]yahoo.com> wrote:

- quote -

Get to over $100,000 of taxable income so you're forced to the tax rate
schedules.

If that isn't feasible, write your members of Congress suggesting that they
amend the law to offer the taxpayer the option to use the tax rate schedules
at all income levels.

--
Phil Marti
Clarksburg, MD

--
<< ------------------------------------------------------- > << 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 ran into a strange problem. There was a spin off, and about $35 was
received for cash in lieu. Being lazy to look up the original
purchase date and calculate the cost basis for the fractional number
of shares, I just entered the purchase date as the date of the split
and the cost basis as zero, for a net short term gain of $35.

Then I decided to calculate the exact numbers, hoping it would reduce
tax. The cost basis was $14 and the purchase date many years ago, so
the net gain was long term of 35-14=21. But the tax increased!

It seems the reason for this is the rounding of taxes under 100k.
Consider by example:

- For single filer, 50000 to 50050 has tax of 8930
- Suppose taxable income is 50050 with the $35 included in short term
gains
- Tax is 8930
- Now remove $35 for short term gain and add $21 to long germ gains
- Short term tax is still 8930
- Add long term tax of 21*0.15 = $3 rounded

And to make matters worse, in the lazy approach, the cost basis for
the shares when you eventually sell them would be X. But in the exact
approach, the cost basis would be X-14, thereby increasing your tax by
14*0.15 = $2 rounded.

Is there anything that can be done about this?

--
<< ------------------------------------------------------- > << 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. > << ------------------------------------------------------- >