Capital Gains Tax 2003

Q: What are the laws for short and long term cap gains for tax year 2003?

A: If your sale is long term (held over a year) and was sold prior to May 6, 2003 it is taxed at 20% unless you are in the 15% of lower bracket, and then 10%, and if held ove 5 years, 8% if in the 15% of lower bracket. If it was sold after May 5, 2003 and long term it is taxed at 15% unless you are in the 15% or lower bracket, then 5%. No 8% for sales after May 5, 2003. Qualified Dividends are taxed at 15% all year unless you are in the 15% or lower bracket, then 5%. 25% and 28%gains are taxed at those percentages (25%, 28%)or your tax bracket if lower. Short term gains ara taxed at your tax bracket. If you want to see how the IRS expects you to calculate this go to: http://www.irs.gov/taxpros/lists/0,,id=97784,00.html and download the Draft Form of Schedule D, or worse yet, if you have 25% or 28% gains you'll need the Schedule D Tax Worksheet-Line 53. The IRS just figured it out on July 15--too late to figure your second installment, which should be considerable lower on the AI method (or 90% of current year's tax) than last year or your first installment. Have fun.

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