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Category: Tax
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Experience:  CPA with tax experience.
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are capital gains in an irrevocable trust taxed at a different

Resolved Question:

are capital gains in an irrevocable trust taxed at a different rate
Submitted: 7 years ago.
Category: Tax
Expert:  JKCPA replied 7 years ago.



Thanks for your question.


Yes, they are different. The 2009 long-term capital gain tax rate for trusts is a flat 15%. The rate for individuals is 0% for those in the 15% and lower marginal income tax brackets and 15% for those in the 25% and higher marginal tax brackets.


If the capital gain is not distributed to a beneficiary, the trust's tax rate (Form 1041) applies. Any portion distributed is reported on a Schedule K-1 to the beneficiary and taxed at the individual's rate.


Short-term capital gains are taxed as ordinary income and taxed at the marginal tax rates for both trusts and individuals. Collectible gains are taxed at 28% for both also.


For more information, see 2009 Instruction 1041 Schedule D


Hope this helps,

Best regards,


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