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08/25/2014

Important Tax Aspects of Securities

Capital Gains and Losses and Qualified Dividends

  • Short term capital gains are gains from the sale of securities where the holding period is 12 months or less.
  • Short term capital gains are currently taxed at ordinary income tax rates.
  • Long term capital gains are gains from the sale of securities where the holding period is longer than 12 months.
  • Long term capital gains and qualified dividends are currently taxed according to the following:
    • 0% if taxable income falls in the 10% to 15% marginal tax brackets
    • 15% if taxable income falls in the 25%, 28%, 33% or 35% marginal tax brackets
    • 20% if taxable income falls in the 39.6% marginal tax bracket
    • 25% on Depreciation Recapture
    • 28% on Collectibles (art, gold, etc.)
    • 28% on qualified small business stock after exclusion
  • Capital Loss are deductible in a year up to $3,000 after the netting process is completed. Any loss in excess of $3,000 can be carried over to future years.

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