Re: Pay taxes on capital gains even if below deduction?

From: Rich Carreiro <rlcarr@animato.pn.com>
Subject: Re: Pay taxes on capital gains even if *below* deduction?
Date: Thu, 18 Jun 1998 19:02:37 -0400

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>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.

Yes you are.  1040 Line 38 - taxable income, which takes into
account all their deductions and personal exemptions - is carried to 
Sched D line 19.  Look at Sched D line 53.  You figure the
tax on the that number.  Then look at line 54,
the tax you have for the year.  It is the *smaller* of line 53
or the tax figured by lines 20-52.  So if not considering cap
gains separately would result in a lower tax, they'll pay the
lower tax.

So you are needlessly getting yourself all worked up.

Rich Carreiro
rlcarr@animato.pn.com
P5-100/RedHat Linux 4.1



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