Capital Gains Tax

The FBI is investigating Rep. Gary Miller (R-Diamond Bar) for a series of land transactions in which he avoided paying capital gains taxes after saying he had been forced to sell under eminent domain in Monrovia and Fontana. The federal investigation was initiated after The Times reported in August that officials in both cities denied that they had acquired Miller's property using eminent domain, which enables governments to buy land for certain purposes even if owners do not want to sell.

Zhang Mei sat inside a packed, smoke-filled stock trading hall here today, still pained by a plunge in share prices the day before that cost her almost a tenth of her retirement funds. "I don't understand why it dropped so much," said the retired department store employee, recounting how she raced to the computers here Tuesday in a fruitless bid to sell before the market closed. "It was already too late. There were too many people waiting for computers." Shanghai's benchmark index tumbled 8.

SHOULD MANAGERS OF takeover firms be encouraged by the tax code to receive a share of the profits from a restructured company's eventual sale? The question might bore even accountants, but billions of dollars of profits and potential tax revenues are at stake. That's why the Senate Finance Committee is considering classifying the managers' payday as ordinary income, subject to tax rates as high as 35%, instead of as long-term capital gains, which are taxed at 15%.

Taxes often figure into the decision to keep or sell a home in a divorce. The gain, or profit, from a home sale can create a tax-free windfall for sellers if Internal Revenue Service rules are met. Under the rules, a single taxpayer can exclude up to $250,000 from capital gains taxes, and married couples filing jointly are entitled to exclude as much as $500,000. Any gains higher than those amounts are taxed as capital gains, at either 10% or 15% for federal taxes, and up to 9.

A little-noticed provision in the recently passed tax act has given songwriters something to croon about. Starting next year, songwriters will be able to claim capital gains treatment when they sell a catalog of their work. This is a stark departure from current law, under which such sales are taxed at ordinary income tax rates that can be as much as 20 percentage points higher.

Re "An absolute menace," Opinion, March 13 Does the Club for Growth actually think that labeling moderate Republican senators "comrade of the month" means anything at all to the majority of American voters? I doubt that most people make the connection between comrade and communist. How many American voters even know who Karl Marx was? Next will the Club for Growth be calling Sen. Arlen Specter (R-Pa.) a Wobbly? Isn't it time somebody told former Rep. Pat Toomey (R-Pa.) and the Club for Growth that Red-baiting went out with Joe McCarthy?

Santa Monica tax accountant Phil Holthouse doesn't need to poll his clients about the complexity of the new capital gains and dividend tax laws -- he has seen it in his own tax documents. Last year's tax law cut rates on both capital gains and dividends. But it also added a new layer of complexity. Some capital gains -- profits from the sale of assets -- are taxed at 15%, others at 20%. Some dividends from stocks and bonds are taxed at 15%, others at ordinary income tax rates.

Like many people, Augusta Solursh hasn't necessarily kept up on tax law. So when the 86-year-old widow sold her Hancock Park condo in February, she got a tax-free bonus she didn't expect. Solursh, who had owned her condo since 1983, sold to move to a rental in Park La Brea, an area convenient to shopping, friends and where, she said, "all the activity is in Los Angeles." Her motivation: "I moved because it was time to change." The move proved a boon to her financial portfolio.

Stock mutual fund investors have a good shot at winning twice this year: Stocks are up sharply, but that probably won't translate into taxable capital gains distributions for most fund owners. Many funds are sitting on accumulated losses from the 2000-02 bear market. Portfolio managers can use previously realized losses to offset newly realized gains, so they may have no net gains to distribute to their shareholders toward year-end.

Old conventional wisdom: Variable annuity sales are doomed, thanks in part to reductions in the capital gains tax and the advent of the Roth IRA. New conventional wisdom: These often-maligned retirement accounts are alive and well, thanks in part to the Roth. Americans purchased a record $27.1 billion in variable annuity contracts during the second quarter of this year, according to figures released Thursday by the Variable Annuity Research and Data Service, in Marietta, Ga.