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The Fiscal Cliff: Should You Harvest Gains In 2012?

After Tax Proceeds - High Income California Taxpayer

Tax-wise, 2012 is an unusual year. Most experts are predicting, with an unusual amount of certainty based on the political climate and the state of the deficit, that the long-term capital gains tax rate will increase in 2013, to 20% from 15%. In 2012, Congress added an additional 3.8% capital gains tax as part of Obamacare. Therefore, the total could go to 23.8% from 15%. This means someone selling a long-term capital gain in 2013 would pay an additional 8.8% on those gains compared with someone selling in 2012, unless an unforeseen compromise during the fiscal cliff negotiations averts the increase. There’s a saying among tax accountants that the tax tail shouldn’t wag the dog; the tax consequences of an […]