Forefront’s Friday Facts
A Taxing Story: Capital Gains and Losses
Chris Rock once remarked, “You don’t pay taxes – they take taxes.” That applies not only to income but also to capital gains.
Capital gains result when an individual sells an investment for an amount greater than their purchase price. Capital gains are categorized as short-term gains (a gain realized on an asset held one year or less) or as long-term gains (a gain realized on an asset held longer than one year).
Keep in mind that the information in this material is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation.
Long-Term vs. Short-Term Gains
Short-term capital gains are taxed at ordinary income tax rates. Long-term capital gains are taxed according to different ranges (shown below).1
Long Term Capital Gains Tax Brackets (for 2023)
| Tax Bracket/Rate | Single | Married Filing Jointly | Head of Household |
| 0% | $0 – $44,625 | $0 – $89,250 | $0 – $59,750 |
| 15% | $44,626 – $492,300 | $89,251- $553,850 | $59,751 – $523,050 |
| 20% | $492,300+ | $553,850+ | $523,0500+ |
It should also be noted that taxpayers whose adjusted gross income is in excess of $200,000 (single filers or heads of household) or $250,000 (joint filers) may be subject to an additional 3.8% tax as a net investment income tax.2
Also, keep in mind that the long-term capital gains rate for collectibles and precious metals remains at a maximum of 28%.3
Rules for Capital Losses
Capital losses may be used to offset capital gains. If the losses exceed the gains, up to $3,000 of those losses may be used to offset the taxes on other kinds of income. Should you have more than $3,000 in such capital losses, you may be able to carry the losses forward. You can continue to carry forward these losses until such time that future realized gains exhaust them. Under current law, the ability to carry these losses forward is lost only on death.4
Finally, for some assets, the calculation of a capital gain or loss may not be as simple and straightforward as it sounds. As with any matter dealing with taxes, individuals are encouraged to seek the counsel of a tax professional before making any tax-related decisions.
1. Investopedia.com, July 19, 2022 2. IRS.gov, 2023 3. Investopedia.com, May 4, 2022 4. Investopedia.com, February 24, 2023
Here’s what we were reading this week:
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Why Americans’ ‘YOLO’ spending spree baffles economists:
- Despite past trends, US consumers are spending at record levels. Economists are mystified – and struggling to forecast an end point. BBC
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How much should it cost to sell a house? Your real estate agent may be charging too much:
- Why should homebuyers and sellers pay for services they neither want nor use? It’s like being forced to pay a travel agent commission when booking a flight directly online. USA Today
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Women’s sports, NFL’s Swift bump and Messi helped define a big year in ticket sales, StubHub says:
- Women’s sports saw a major increase in ticket sales this year, StubHub said. Lionel Messi’s U.S. debut provided a major boost to MLS and Inter Miami. Taylor Swift brought strong ticket demand for the NFL’s Kansas City Chiefs this season. CNBC
Forefront Market Notes: December 4th
About Amit: I am a first generation American, the son of a working-class Indian family, and I lived through my parents’ struggle to find their place in this country, to put down roots that would sustain them as well as their children in a new land. As they encouraged me to excel in school and fostered my hobbies and interests, I was keenly aware of the dynamic between them. I understood that there was a difference between where they came from individually and where we were now. They worked hard in their individual capacities, but they weren’t always on the same page about financial issues – and that can make or break a family’s future. I didn’t know it at the time, but this laid the groundwork for my passion towards financial services and helping families succeed.