208-664-8980

1875 N. Lakewood Dr.
Suite 102
Coeur d'Alene, ID 83814

A Taxing Story: Capital Gains and Losses

Chris Rock once remarked, “You don’t pay taxes, they take taxes.”¹ That applies not only to income, but also to capital gains.

Capital gains result when an individual sells an investment for an amount greater than his or her purchase price. Capital gains are categorized as short-term (a gain realized on an asset held one year or less) or as long-term (a gain realized on an asset held longer than one year).

Long-Term vs. Short-Term Gains

Short-term capital gains are taxed at ordinary income tax rates, while long-term gains are taxed at a lower rate, based on an individual’s marginal income tax bracket.

If you are in the…your long-term capital gains rate will be…
10%-15% tax bracket0%
25%-35% tax bracket15%
39.6% tax bracket20%

It should also be noted that taxpayers whose adjusted gross income is in excess of $200,000 (single filers) or $250,000 (joint filers) may be subject to an additional 3.8% tax as a net investment income tax.²

Also, keep in mind that the long-term capital gains rate for collectibles and precious metals remains at a maximum 28%.

Rules for Capital Losses

Capital losses may be used to offset capital gains.³ If the losses exceed the gains, up to $3,000 of those losses may be used to offset the taxes on other kinds of income. Should you have more than $3,000 in such capital losses, you may be able to carry the losses forward. You can continue to carry forward these losses until such time that future realized gains exhaust them. Under current law, the ability to carry these losses forward is lost only on death.

Finally, for some assets, the calculation of a capital gain or loss may not be as simple and straightforward as it sounds. As with any matter dealing with taxes, individuals are encouraged to seek the counsel of a professional tax advisor before making any tax-related decisions.

  1. Brainy Quote, 2017
  2. IRS, 2017
  3. The information in this material is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation.

The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. This material was developed and produced by FMG Suite to provide information on a topic that may be of interest. FMG Suite is not affiliated with the named broker-dealer, state- or SEC-registered investment advisory firm. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security. Copyright 2019 FMG Suite.

Share |
 

Related Content

Inflation and Your Portfolio

Inflation and Your Portfolio

Even low inflation rates can pose a threat to investment returns.

How the Federal Reserve Works

How the Federal Reserve Works

Each day, the Fed is behind the scenes supporting the economy and providing services to the U.S. financial system.

5 Smart Investing Principles

5 Smart Investing Principles

Principles that can help create a portfolio designed to pursue investment goals.

 

Have A Question About This Topic?







Thank you! Oops!

A Decision Not Made Is Still a Decision

Investors who put off important investment decisions may face potential consequence to their future financial security.

Inflation & Your Money

It's important to understand how inflation is reported and how it can affect investments.

TIPS for Inflation

If you are concerned about inflation and expect short-term interest rates may increase, TIPS could be worth considering.

View all articles

Contributing to an IRA?

Determine if you are eligible to contribute to a traditional or Roth IRA.

What Is the Dividend Yield?

This calculator helps determine your pre-tax and after-tax dividend yield on a particular stock.

Impact of Taxes and Inflation

Estimate the potential impact taxes and inflation can have on the purchasing power of an investment.

View all calculators

5 Smart Investing Strategies

There are some smart strategies that may help you pursue your investment objectives

5 Smart Investing Principles

Principles that can help create a portfolio designed to pursue investment goals.

Keys to Investing for Retirement

There are some key concepts to understand when investing for retirement

View all presentations

It Was the Best of Times, It Was the Worst of Times

All about how missing the best market days (or the worst!) might affect your portfolio.

16 Wall Street Cliches in 60 Seconds

Pundits say a lot of things about the markets. Let's see if you can keep up.

Should I Invest in Gold?

Learning more about gold and its history may help you decide whether it has a place in your portfolio.

View all videos