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

From: Avrum Lapin <avrum113@earthlink.net>
Subject: Re: Pay taxes on capital gains even if *below* deduction?
Date: Fri, 19 Jun 1998 06:43:08 -0700 (PDT)

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At 12:20 PM -0600 6/18/98, persfin-digest wrote:
>Date: Mon, 15 Jun 1998 11:03:01 -0400
>From: "Rao, Bharat" <bharat@scr.siemens.com>
>Subject: Pay taxes on capital gains even if *below* deduction?
>
>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.

If their income is less than the sum of the personal exemptions and the
standard deduction then it is not necessary to file.  Look at the table on
Page 7 of the 1040 Instructions (called Filing Requirements)  or am I
missing something.
>
>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..

If the amount of Capital Gains is small and they are in the form of
distributions and you are in a low tax bracket the amount you might save
may be out weighed by the fee charged to fill out schedule D>  This cynic
believes that  H&R Block writes the tax code (so that only they can
interpret it)


Avrum Lapin
Upland., CA





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