Dazed and confused by the new myriad of rules for completing 1997 taxes?

So, are a lot of people!

The big changes are in Capital Gains, treatment of gains from sales of principal residences, and the new IRAs. This was meant to be a tax relief act.

My name is Roxanne Goldberg, a Pennsylvania CPA. I have 17 tax seasons behind me, and they just keep playing with the tax laws. I think the main motivator for tax law changes, is to make a certain lobbying group happy. Do you feel like the new tax laws are really going to help you? The only change in the new tax laws to help me, is a slight increase in the amount of my Blue Cross that I can deduct on page 1 of 1040. Needless to say, I am less than enthused with the myriad of changes made. The worst part, is that they made a bunch of different effective dates for the changes, and this will make for some headaches during tax season. I have done tax returns in a slew of different states. They include: PA, NJ, DE, LA, CA, MD, MA, NY, VA, NC, IL....

I will answer non-research tax questions for free.

• Property held over 1 year, and sold prior to May 7th, is still subject to the old maximum rate of 28%.
• You still use the 28%, for property held 12-18 months, and sold after July 7th.
• Property held over 1 year, and sold May 7-July 28th qualifies for the new 20% maximum rate. Taxpayers in the 15% bracket pay only 10% on sales during this time frame.
• If you sell property held over 18 months, and sold July 29th and on, it is at a maximum of 20% tax. The rate for 15% bracket taxpayers, is only 10%.
• A 25% maximum tax rate applies to real estate gains (to the extent of depreciation allowed or allowable).
• If you wait until 2001 to sell, an 18% maximum tax rate will apply, for assets held for more than 5 years.
• You can get this 18% maximum sooner, if you "mark the property up to market value" on January 1, 2001, and pay the 20% rate capital gains rate, as of that date on the prior appreciation. Then, any future appreciation is only subject the the 18% maximum rate, provided the property is held for 5 more years.
• Taxpayers in the 15% bracket will pay only 8% on capital assets sold after 2000, and held for 5 years. The lower income taxpayers do not have to "mark to market" to enjoy this lower rate.
• To all of you coin, stamp, and other collectibles hobbyists, this one is going to hurt! The collectibles are still subject to the 28% maximum rate!
• Gains from certain small business stock (probably Section 1244 corporations), held for more than 6 months, can be reinvcested into new small business stock, tax free!, for sales August 6th or later.
• Last, but not least....Gains on property held less than one year, will still be subject to ordinary income tax rates, that is, up to 39.6%.

SINGLE

$      0    $ 25,350                       15%         $     0
  25,350      61,400        3,802.50 +     28%            25,350
  61,400     128,100       13,896.50 +     31%            61,400
 128,100     278,450       34,573.50 +     36%           128,100
 278,450     .......       88,699.50 +   39.6%           278,450  

   Married Filing Jointly or Qualifying Widow(er)

$      0     $ 42,350                       15%         $     0
  42,350      102,300        6,352.50 +     28%           42,350
 102,300      155,950       23,138.50 +     31%          102,300
 155,950      278,450       39,770.00 +     36%          155,950
 278,450      .......       83,870.00 +   39.6%          278,450

            Married Filing Separately

$      0     $ 21,175                        15%         $    0
  21,175       51,150         3,176.25 +     28%           21,175
  51,150       77,975        11,569.25 +     31%           51,150
  77,975      139,225        19,885.00 +     36%           77,975
 139,225      .......        41,935.00 +   39.6%          139,225

             Head of Household

$      0     $ 33,950                        15%          $    0
  33,950       87,700          5,092.50 +    28%            33,950
  87,700      142,000         20,142.50 +    31%            87,700
 142,000      278,450         36,975.50 +    36%           142,000
 278,450      .......         86,097.50 +  39.6%           278,450

Disclaimer: I will not be responsible for any errors or omissions in the above information. Please consult your tax advisor, for more information.

This page has been visited by nervous taxpayers.

Thank you for your time.