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Financial Planning Center |
Taxes
Capital Gains
The profit you make on the sale of stock is known as a capital gain. If you have owned the stock for a year or longer, your increase is considered a long-term capital gain for income tax treatment. That means you pay the tax at a lower rate than you pay on your earned income or on dividends and other investment income. Generating capital gains could be one of your big opportunities to save on taxes.
Federal Tax Rates
The following Federal Income Tax Rates come directly from the U.S. Master Tax Guide for the years 2000 and 2001. The 2001 Tax Rate Schedules were prepared based on the inflation-adjustment provisions of Section 1(f) of the Internal Revenue Code and the average of the Consumer Price Indexes published by the Department of Labor for each month in the 12 month period ended August 31, 1999. Please note that the official tables for 2001 had not been released by the IRS at the date of publication.
Gift Tax Basics
The federal government imposes a substantial tax on gifts of money or property above certain levels. Without such a tax someone with a sizable estate could give away a large portion of their property before death and escape death taxes altogether. For this reason, the gift tax acts more or less as a backstop to the estate tax. And yet, few people actually pay a gift tax during their lifetime. A gift program can substantially reduce overall transfer taxes; however, it requires good planning and a commitment to proceed with the gifts.
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