topic Short term capital loss and long term capital gain in Investors & landlords

Short term capital loss and long term capital gain

anushbabu — Mon, 05 Apr 2021 07:37:12 GMT

Hi turbo tax.

This year say I am doing a joint filing(married)

I have short term capital loss = 25K

and long term capital gains = 100k

Overall I have positive capital gains which is under 80K

Looking around the rules this is what I found

https://www.investopedia.com/articles/personal-finance/101515/comparing-longterm-vs-shortterm-capital-gain-tax-rates.asp

Seems like there should not be taxable, as I filed as married jointly.

But my actual return looks different, It shows as If I owe money to IRS.

Can you please correct my confusion here

Thanks

Re: Short term capital loss and long term capital gain

JohnB5677 — Mon, 05 Apr 2021 12:22:29 GMT

This is the significant quote from the article:

"Long-term capital gains are derived from assets that are held for more than one year before they are disposed of. Long-term capital gains are taxed according to graduated thresholds for taxable income at 0%, 15%, or 20%. The tax rate on most taxpayers who report long-term capital gains is 15% or lower."

Based on what you said you will have $75K of taxable long term gain. Depending on the tax bracket that your in you will pay, in most cases up to 15%. But if you are in a lower tax bracket, it will reflect that tax.

Re: Short term capital loss and long term capital gain

Hal_Al — Mon, 05 Apr 2021 12:56:02 GMT

You're misunderstanding how long term capital gains (LTCG) are taxed. $80,250 is the taxable income threshold for the 12% tax bracket (Married Filing Jointly). Your ordinary income, e.g. wages, go in the 12% bracket, not your LTCG.

Using an example: you have $50,000 ordinary income and $75,000 net LTCG. After applying your standard deduction ($24,800) you have $100,200 taxable income. $25,200 (50,000 - 24,800) ordinary income will be taxed at 12%.

$55, 050 (80,250- 25,200) of your LTCG will be taxed at 0% and $19,950 (75,000 - 55,050) will be taxed at 15%.

Re: Short term capital loss and long term capital gain

brianjplew1 — Mon, 11 Apr 2022 14:59:21 GMT

In 2019 my company was purchased by a private equity group. I was given class B shares at that time. We filed these with the IRS with a $0 dollar purchase price. In 2021 we were again purchased and the class B shares were paid out and were taxed at the time of distribution at a 20% rate (roughly $388,000). When I am preparing and entering the information from the K-1 & K-3 it shows that I owe close to $75,000 in federal tax and $15,000 in state tax. Is this correct that I get taxed twice on the capital gains?

Re: Short term capital loss and long term capital gain

Hal_Al — Mon, 11 Apr 2022 15:35:51 GMT

@brianjplew1 Rather than tagging on to an existing thread, on a somewhat different topic, you should post a new question to get "more eyes on it".