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Archive for May 20th, 2015

Cap Gain Tax Rates Are Not Simple

Posted by taxguru on May 20, 2015

From a client in Texas:


We are considering marketing our Louisiana property this year. I was banking on just the 15% long-term cap gains tax, but my sister says Obama has done something that adds another 4% to it. Will you please confirm what the rate would be?



My reply:

I’m glad to see that you are researching this ahead of time because there is no quick and easy answer. As with most tax matters, there are actually different rates depending on the type of gain and the level of your other income.

I am attaching some explanatory brochures on this subject.

As you can see on the one called “Stocks, Bonds & Mutual Funds,” the Federal long term cap gain (LTCG) rate goes from zero percent to 20%, depending on your ordinary tax bracket.  If you are in the 15% Fed tax bracket, as you were in 2013 and 2012, the LTCG rate would be zero.

The extra 4% tax your sister referred to is actually a new 3.8% tax on net investment income that was part of the ObamaCare law. Capital gains are part of the net investment income.  However, as you can see on the brochure called “Other Individual Taxes,” this tax only kicks in when your adjusted gross income (AGI) is over $250,000

There are some additional factors that you may have overlooked here.

1.  If the property has been depreciated, the Federal rate on the recapture of that depreciation is 25%.  The best way to see how much recapture you will have is for the partnership’s tax preparer to run a proforma 2015 tax return with a guesstimated sale amount to see what the results will be for each partner.

2.  Being located in Louisiana, any gain from the sale of that property would be subject to that state’s income tax, which would be six percent (6%).  While you probably won’t be subject to the 3.8% net investment income tax, you will definitely be subject to the LA tax.

3.  If the expected taxes are high enough to motivate a 1031 like kind exchange, you need to set this in motion ahead of time.  There are some complications with 1031s that involve property owned by an LLC or partnership if not all of the owners are doing the same thing.

I hope this info is useful.  Let me know if you have any other questions.


Client Response:

Well, it hurts that the capital gain is subject to Louisiana to tax. Sure appreciate your feedback, as always. May have more questions.


TaxCoach Software: Are you giving your clients what they really want?


Posted in CapGains | Comments Off on Cap Gain Tax Rates Are Not Simple

Per Mile Tax

Posted by taxguru on May 20, 2015

For several years now, various governmental entities have been threatening to start levying a per mile tax on vehicles because they aren’t satisfied with what they are already taking in at the fuel pumps and toll collectors.

It looks like,Oregon is going to start that process, which will most likely spread across the county. Of course, as is always the case, this will end being an additional tax and not just a replacement for an existing one.

Oregon to test pay-per-mile idea as replacement for gas tax

This issue reminds me of the following verse from George Harrison’s classic TaxMan song.

If you drive a car, I’ll tax the street
If you try to sit, I’ll tax your seat
If you get too cold I’ll tax the heat
If you take a walk, I’ll tax your feet


TaxCoach Software: Finally! Plain-English Tax Planning That Builds Your Business!


Posted in NewTaxLaws, TaxMan, Vehicles | Comments Off on Per Mile Tax

“You didn’t build that”

Posted by taxguru on May 20, 2015

A recurring DemonRat mantra is that anyone who has done well in what they call “life’s lottery” owes every bit of that success to the government.  Dims, as with their Marxist comrades, actually believe that Big Government is more important to every aspect of everyone’s existence than anything or anyone else, including God.

Ray Stevens just posted this great example of the hypocrisy of this DemonRat philosophy.

While this video doesn’t focus on it, I found it slightly ironic that one of the examples of success, Ted Turner, became a huge supporter of Marxism after he became wealthy.

Posted in Commies, Ray Stevens, video | Comments Off on “You didn’t build that”