- 8 - gain subject to a section 1(h) tax rate of 25 percent. Petitioners assert that long-term capital gains are taxed at a maximum 20-percent rate; therefore, the entire gain from the sale of their investment property should be taxed at only 20 percent. While the Taxpayer Relief Act of 1997 (1997 Act), Pub. L. 105-34, sec. 311, 111 Stat. 831, did reduce the maximum capital gains rate on net capital gains from 28 percent to 20 percent, petitioners’ assertion fails to take into consideration all of the relevant changes made by the 1997 Act. The 1997 Act made several changes to the capital gains tax. For the 1997 tax year, the capital gains tax rates vary depending on the type, nature, and amount of the gain. In addition, the length of time the asset was held before its disposition and the date of the disposition affect the capital gains tax rates for 1997. Section 1(h), in pertinent part, provides as follows: SEC. 1(h). Maximum Capital Gains Rate.-– (1) In general.--If a taxpayer has a net capital gain for any taxable year, the tax imposed by this section for such taxable year shall not exceed the sum of-- (A) a tax computed at the rates and in the same manner as if this subsection had not been enacted on the greater of-- (i) taxable income reduced by the net capital gain, or (ii) the lesser of-- (I) the amount of taxable income taxed at a rate below 28 percent, orPage: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Next
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