Raising your personal income tax rate on dividend and capital gain income to 30 percent increases your effective tax rate to 45.3 percent.
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So if trust income is a mixture of dividend, capital gain and tax-free income (from muni bonds or principal), the ordinary income must be used up before the payout can be taxed as gain, and gain must be used before the payout can be tax-free.
In many cases for inventors and flow through entities, IP can produce capital gain rather than ordinary income.
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Gone are the questions for shareholders about which gains could be taxed as capital gain rather than ordinary income.
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Tax nerds were whirring away with programs over which gains could be taxed as capital gain rather than ordinary income.
All income or loss would be separated into three buckets: tax credits, capital gain rate items, and ordinary income (all other items).
Myopically, I wonder whether the star will pay ordinary income or capital gain on all that revenue?
Conceivably because the phantom income was capital gain, Mr. Marshall would have actually come out ahead in 2005.
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Either way, the assets grow tax-deferred and withdrawals are taxed as ordinary income, not capital gain.
People have been buying purely in the expectation of capital gain, regardless of the underlying income stream.
When it turned around the phantom income was a capital gain.
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Carried interest is treated as a capital gain on investment rather than as income from employment, and so attracts more lenient tax treatment than the latter.
Currently, investors have no financial incentive to invest for the long term returns on investments held for less than a year are taxed as personal income, but capital gain taxe applies unilaterally and equally to any investment held for even a day beyond 365 days.
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If there is going to be a preferential rate for capital gains, people are going to try to structure as much of their income to take the form of capital gain as possible.
Under current law, for example, an IRA's capital gain is treated as regular, taxable income when withdrawn.
That "would slam the door shut on lower capital gain rates for thousands of middle-income and affluent families, " says Onink.
For example, the tax law allows carried interests to be taxed as capital gain even though they seem like service income.
The advantage to this strategy: Lewis would convert ordinary income into lower-taxed capital gain, and he would participate in continued price appreciation in the stock.
Though the Census Bureau data shows that per capital disposable income was higher in right-to-work states, it is still not clear if this income gain is causally tied to right-to-work laws, or that it is appreciable enough to lure in better teachers.
Apologists for the capital gains tax say that when an asset is sold, the capital gain is converted to cash and can be viewed as an income flow.
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Capital gain rates are set to increase from 15% to ordinary income tax rates as high as 43.4% if you are in the top tax bracket and factor in the new Medicare tax on unearned income.
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When you do sell, which hopefully will be a long time from now, some of your gain will be taxed at the favored 18% or 20% capital gain rate, some at 25%, and some at full ordinary income rates.
Redeem on Dec. 9 and you have effectively converted a chunk of interest income into a (for you, tax-free) capital gain.
At the federal level, the capital gain rate remains 15% for some, but rose to 20% for higher income taxpayers.
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In effect, I was replacing some of the high-taxed coupon income I would have had between 2009 and 2026 with a low-taxed capital gain now.
For most of us, the practical dollar effects of AMT are far more than the capital gain rate spread, or between 35% and 39.6% top rates on ordinary income.
For most of us, the practical dollar and cents effects of AMT are far more than a mere 15% and 20% capital gain rate spread, or between a 35% and 39.6% top rate on ordinary income.
The long-term capital gain, however, would be taxed at a low rate, a little more than half your ordinary income rate.
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