Capital gain tax on stock sale transaction above certain amount

[Valhalla3]

It's my understanding that there is an amount, above which, you will pay a higher capital gains tax on a single stock sale transaction. Can you tell me what this or these range or ranges are? I thought it was starting at $250,000.

 

[Taxing Matters]

It's my understanding that there is an amount, above which, you will pay a higher capital gains tax on a single stock sale transaction.

There is no such rule for U.S. federal income tax. The tax you pay depends on your total income and the net capital gain you have for the year. If your total income and investment income are large enough you may also have to pay a net investment tax on top of the capital gain tax. But again this is based on your total investment income. There is nothing that singles out one particular transaction for higher rates or special treatment. See IRS topic 409 on capital gains for an overview of the subject.

 

[HRZ]

There is a sort of surtax on net investment income of 3.8 % for higher income tax payers...and one of the threshold criteria is a tax on amounts over a modified adjusted gross income of $250,000....as taxing matters discussed above ...your mention of $250,000. suggests that may be nature of your question.

 

[Valhalla3]

There is no such rule for U.S. federal income tax. The tax you pay depends on your total income and the net capital gain you have for the year. If your total income and investment income are large enough you may also have to pay a net investment tax on top of the capital gain tax. But again this is based on your total investment income. There is nothing that singles out one particular transaction for higher rates or special treatment. See IRS topic 409 on capital gains for an overview of the subject.

Thank you for answering! I am in a 0% tax bracket now. If I sold stock and received $600,000 minus $60,000 as the cost basis for the shares, I would have $540,000. These stocks would be a long term holding. So would this push me into the highest income tax bracket of 37% or whatever it is now, plus the 3.8% net investment tax. Or would it be the long term tax of 0, 15 or 20%? Or something entirely different?

Also, is there anything with stock investments that is comparable with real estate capital gains where you can avoid or postpone some tax by reinvesting within a certain time period?

 

[Valhalla3]

There is a sort of surtax on net investment income of 3.8 % for higher income tax payers...and one of the threshold criteria is a tax on amounts over a modified adjusted gross income of $250,000....as taxing matters discussed above ...your mention of $250,000. suggests that may be nature of your question.

Thank you for responding!

 

[LdiJ]

Thank you for answering! I am in a 0% tax bracket now. If I sold stock and received $600,000 minus $60,000 as the cost basis for the shares, I would have $540,000. These stocks would be a long term holding. So would this push me into the highest income tax bracket of 37% or whatever it is now, plus the 3.8% net investment tax. Or would it be the long term tax of 0, 15 or 20%? Or something entirely different?

Also, is there anything with stock investments that is comparable with real estate capital gains where you can avoid or postpone some tax by reinvesting within a certain time period?

Then barring any other information we are unaware of, you are going to pay the 15% capital gains rate and the 3.8% surcharge making your rate 18.8%

 

[Taxing Matters]

Also, is there anything with stock investments that is comparable with real estate capital gains where you can avoid or postpone some tax by reinvesting within a certain time period?

You can't do that with real estate, and you can't do that with stock either.

With investment & commercial real estate you can defer the tax by exchanging one property for another in what is known as like kind exchange. But that requires setting up the transaction from the start to accomplish the trade. If you sell the property and get the cash in your hands it is too late to do a like kind exchange. You cannot do a like kind exchange with stock.

 

[quincy]

Just to be clear, Valhalla: You ARE located in the U.S., correct?