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Therefore, if the taxpayer's sister were to sell the house for $100,000, she would not have to pay any income tax because the sales price ($100,000) minus her stepped-up basis ($100,000) would be a capital-gain income of zero. See the explanation under "Rationale for stepped-up basis" (below) for an explanation of why the Tax Code would do this.
You are correct that the IRS lets individuals exclude up to $250,00 in profits from the sale of a primary residence from taxes. Married couples filing their taxes jointly can exclude up to $500,000.
From 1998 through 2017, tax law keyed the tax rate for long-term capital gains to the taxpayer's tax bracket for ordinary income, and set forth a lower rate for the capital gains. (Short-term capital gains have been taxed at the same rate as ordinary income for this entire period.) [ 16 ] This approach was dropped by the Tax Cuts and Jobs Act ...
The estate of a person who died in the year 2010 would have been entirely exempt from tax while that of a person who died in the year 2011 or later would have been taxed as heavily as in 2001. On December 17, 2010, Congress passed the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010. Section 301 of the 2010 Act ...
Reducing the capital gains taxes you pay on certain assets can keep more of your money in your own pocket. Capital gains taxes can range from 0% to 28%, depending on factors such as your income ...
For instance, if you have one investment that is down by $3,000 and another up by $5,000, selling both will help you reduce your gains. You would only be subject to capital gains taxes on the ...
The capital gains tax applies to this net capital gains figure. Also, if you have a year with a net loss on asset sales, the rules allow a deduction of the loss from your taxable income of up to ...
The $600,000 estate tax exemption was to increase gradually to $1 million by the year 2006. As inherited assets are automatically revalued to their current or "stepped-up" basis, any capital gains are permanently exempted from taxation. Family farms and small businesses could qualify for an exemption of $1.3 million, effective 1998. Starting in ...