Tag Archives: capital asset

Planning for Capital Asset Status

The maximum effective marginal tax rate for individuals can now reach 41.4 percent (after limitations on itemized deductions and phase-out personal exemptions). By contrast, the long-term capital gains tax rate for noncorporate taxpayers is 20 percent (25 percent on unrecaptured § 1250 gain). For corporate taxpayers, ordinary income and long-term capital gains are taxed at 35 percent. From a rate perspective, it is therefore desirable, where possible, to structure individual business transactions so that capital asset status will be accorded. Continue reading

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