0% Capital Gains

I have been reading of late about how Congress is changing the rules for capital gains. However, it may not be for everyone and will only be in affect during the tax years of 2008, 2009 and 2010. According to Kiplingers and USA Today certain lower income stock holders will have 0% capital gains on the sale of their stocks.

To be eligible for the 0% capital gains, the taxpayer can't make more then $32,550 if you are single or $65,100 if you are married filing jointly. This includes the sale of your stock. So, in other words if you are single and make $20,000 and sale $13,000 in stock you will have to pay capital gains on the $500 over the cut off. In addition, you cannot get the incredible tax rate if you have not held the stock for at least a year.

The law did have a loophole, and tax advisor's were quick to advise their clients to give stock to their kids, who traditionally are taxed at a lower rate. Upon learning of this Congress acted just as quickly to close, what the USA Today referred to as a "Hummer size loophole."

But lawmakers weren't happy to hear that parents were planning to exploit the zero-percent capital gains rate, says Ed Slott, an accountant and IRA expert in Rockville Centre, N.Y. "Their intent," he says, "was for retired people to pay a lower rate, not for rich people to shift money to younger kids."

So Congress broadened the "kiddie tax," which taxes a child's investment income at the parents' top marginal rate. The kiddie tax kicks in once a child's unearned income — such as from interest and capital gains — exceeds a certain level. For 2007, that level is $1,700.
- USA Today

So it sounds like this new year may be the year to unload some stock that you may have been thinking of selling.