Word: taxingly
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Dates: during 1990-1999
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What's clearest is that Congress has created a record-keeping nightmare. "We believe the forms are now so complex that for some people the savings will be offset by the need to hire professional guidance," says Roberto Viceconte, a tax attorney at M.R. Weiser & Co. in New York City. He notes that there is already a movement in Congress to simplify the changes. But for '97 your tax return will have to allow for a baffling set of rates...
...start with the tax rate you will pay on capital gains from the sale of stocks or bonds or other assets. The old rate was 28% on any asset held at least 12 months. The new rate is 20% on any asset held at least 18 months, or 28% if held 12 to 18 months. Then and now, gains on assets held less than 12 months are taxed as ordinary income, at rates...
Sounds fairly simple. But in the transition year of 1997 you could easily have triggered three or four different rates, depending on when you sold, what you sold and how long you owned it. And just to keep things fun, the lowest tax rate on gains from the sale of collectibles remains set at 28%. It seems that Congress doesn't want to encourage things like rare paintings, antique tables and wine collections showing up in your 401(k) account...
...loss before May 7, where the 28% rule applies, you're obliged to use it to offset any gains where the 28% rule applies. But, notes Jere Doyle, an estate-planning manager at Mellon Private Asset Management, if you have losses in excess of any gains at a given tax-rate level, you can use those losses to offset gains at another tax-rate level...
That gives you the chance to mismatch a long-term loss with a short-term gain and generate greater tax savings. Say you're in the top 39.6% tax bracket and have no short-term losses but a short-term gain of $1,000. You also have no long-term gains but a long-term loss of $1,000. That long-term loss offsets your short-term gain, rubbing out a $396 tax bill. If you had used the long-term loss against a long-term gain, where 20% is the tax rate, you would have rubbed out only...