Capital gains on selling shares?

Question

I'm thinking of selling shares that I've held for more than a year. What's approximately the capital gains tax I might pay in the US? Any thoughts?

Answer 1

According to paraghraph 1736 of the 2006 U.S. Master Tax Guide published by CCH:


Generally, gain from the sale of long-term capital assets is subject to a maximum capital gains tax rate of 15% (5% for individuals in the 10% or 15% tax bracket)

Answer 2

The simple answer is that selling shares attracts a tax rate of (at most) 15% on the net gain. However, if it is a large amount it may increase your Adjusted Gross Income enough so that you lose certain tax credits or suffer a reduction in allowances (like student loan interest or a reduction in the amount of your itemized deductions. If, even allowing for the sale of shares, your income is going to be in five figures then you can put 15% of the gain in a savings account to pay the additional tax and probably have some left over next April 15th.

Please bear in mind that this is very general guidance. It is impossible to give an accurate answer without more information. Hope this helps anyway.

Answer 3

Current rates for long term gains; investments held for one year and a day or longer; will depend on the tax bracket you are in. In the 15% bracket the rate on long term gains is 5%; get a 2005 tax instruction booklet and you can look up the other rates for the higher brackets. I think the maximum rate in the highest bracket is 20%.

Answer 4

This answer depends on your income and the amount of the gain. Usually the most you'll pay is 28% fed tax on long term gain. You may also have to pay state & local tax.