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Commentary and Analysis Regarding Colorado Law

Take the Gain, Pay the Tax and Run?

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Each Presidential candidate has put forth a proposed plan for Federal taxation of long-term capital gains which, if passed into law in 2021 or beyond, could have major impacts on your decision regarding the timing of sales or transfers of appreciated capital assets.  

1. Mr. Trump has proposed reducing the maximum long-term capital gains tax rate from the current maximum of 20% to 15%. Assuming you sell capital assets in 2020 and have a taxable gain amount greater than $250,000, you’d also owe the Net Investment Income Tax (NIIT) percentage of 3.8% on the amount over the $250,000 threshold (if married, $200,000 for singles), for a combined tax rate of 23.8% on the long term capital gain. Obviously, if Mr. Trump’s plan to reduce the maximum tax rate to 15% is adopted in 2021 by Congress, your tax bill would be favorably impacted if you wait until 2021 or later to sell the capital asset.

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