Pay taxes on capital gains even if *below* deduction?

From: "Rao, Bharat" <bharat@scr.siemens.com>
Subject: Pay taxes on capital gains even if *below* deduction?
Date: Mon, 15 Jun 1998 11:03:01 -0400

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I am doing my parent's taxes this year, and filed for an
extension.  They are retired, have no income, other
than interest/dividend income and capital gains from their
stocks and bonds.

I don't anticipate having to pay a penny of taxes, since
their total amount realized is below the standard deduction
for "married filing jointly."  In year's past, capital gains, etc.
went on Page 1 of the 1040 and were cancelled out by the
deduction.  However, this year, the capital gains, etc., are
all figured at the very end..  And I'm not allowed to carry
over the deduction to the bottom of page 2 to offset the
capital gains.

I understand that the idea is to give people a break by 
charging them a lower rate on their capital gains; however,
in this case, it actually hurts my parents -- it can't be
right, that this new law hurts the elderly and retired whose
sole source of income is their savings.. 

Doesn't make sense.  Any ideas?  (Since their taxes are
*so* simple, I just do them myself, and don't go to an
accountant -- and would prefer not to do that this year too.)

Thanks for any clarification,
Bharat


R. Bharat Rao             E-mail: bharat@scr.siemens.com 
Adaptive Information & Signal Processing, Siemens Corporate Research
US Mail: 755 College Road East, Princeton, NJ 08540
Phones: (609)734-6531(O) (609)734-6565(F) 




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