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Posted by Arthur Kamlet on April 29, 2008, 12:43 pm
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>On Apr 27, 5:19 pm, kam...@panix.com (Arthur Kamlet) wrote:
>
>> See lines 18 & 19 of the Qualified Dividends and Capital Gains
>> Worksheet on page 35 of the Form 1040 instructions.
>> Line 18 asks you to figure the tax on your taxable income without
>> taking into account any special lower rates. Line 19 asks you to
>> choose the lower of line 18 or your tax calculated with the lower
>> tax rate applied.
>
>Line 18 and line 19 are not sufficient to generate the lower tax.
>Turns out my example is too simplistic; the real scenario has several
>thousand dollars of qualified dividends and long term gains. Line 18
>asks you to compute the tax on your entire taxable income using the
>tax table. This means that all the qualified dividends and long term
>gains (several thousand dollars) would be taxed at ordinary income
>rates, which is roughly 25% in my scenario -- the person's salary
>alone puts them in the 25% bracket. So I want the 15% rate for these
>qualified dividends and capital gains. It's just the single capital
>gain of $35 that I want to be treated as short term. Is it possible
>by section 163?
I wouldn't use that. I would calculate based on modifying the worksheet
in order to not pay any more tax when applying the 15% rate to LT gains
and Q.D. and then disclose this recalculation of a few bucks on form
8275.
--
ArtKamlet at a o l dot c o m Columbus OH K2PZH
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