The New Capital-Gains Maze – Wall Street Journal – 02/16/13




The Wall Street Journal

Weekend Investor – Tax Report – February 16, 2013

The New Capital-Gains Maze

Rates on long-term gains are going up this year. How much will you owe?

It depends on your income – and your smarts. Here’s what you need to know.

By Laura Saunders

Long-term capital gains will be subject to three tiers of tax rates and three other taxes beginning this year.

TAX RATES Rate Taxable Income
0% Single Filer $36,250 and under
Joint Filers $72,500 and under
15% Single $36,251 – $400,000
Joint $72,501 – $450,000
20% Single $400,001 and above
Joint $450,001 and above


OTHER TAXES Rate Adjusted Gross Income Threshold
3.8% net investment income tax* Single $200,000
Joint $250,000
Pease limit (approx. 1%**) Single $250,000
Joint $300,000
Personal Exemption Phaseout (PEP) Single $250,000 – $372,501+
Joint $300,000 – $422,501+

Note: Rates apply to sales of securities and other assets held longer than a year and don’t include the 28% rate for long-term gains on collectibles.

*Doesn’t apply to net gains from the sale of an actively managed business.

** Assumes a taxpayer has taxable ordinary income. For those who ave only long-term capital gains and qualified dividends, the Peace limit adds less, about 0.5%.

+A $3,900 exemption per family member begins to phase out at the lower limit and disappears at the upper limit.

Sources: Internal Revenue Service; Tax Policy Center


Comments February 16, 2013

Contributions to your tax shelter(s) can limit or completely eliminate your exposure to the 2013 higher income and capital gains tax rates.  Those same contributions can limit or completely eliminate your exposure to the 2013 new 3.8% investment surtax and aggressive exemptions and itemized deductions phaseouts.

Small business owners, who appear to be the target of these tax increases, have an arsenal of weapons to fight these taxes.  It is a matter of evaluating the best solutions for your circumstances.  Some of those solutions include retirement plans such as: SEP IRA, SIMPLE IRA, 401(k) with or without new comparability and defined benefit.  With proper planning you can shelter well over $100,000 per year.  With further planning you can defer taxes over multiple generations.

Work closely with a Register Investment Adviser (RIA), which is obligated by law to act in your best interest, to plan your best course of action.

Aaron Skloff, AIF, CFA, MBA
CEO – Skloff Financial Group


Aaron Skloff, Accredited Investment Fiduciary (AIF), Chartered Financial Analyst (CFA), Master of Business Administration (MBA), is the Chief Executive Officer of Skloff Financial Group, a Registered Investment Advisory firm. The firm specializes in financial planning and investment management services for high net worth individuals and benefits for small to middle sized companies.  He can be contacted at or 908-464-3060.


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