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Lev, Tax Advisor
Category: Tax
Satisfied Customers: 29573
Experience:  Taxes, Immigration, Labor Relations
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How many % is capital gain to sell an individual taxi medallion

Customer Question

how many % is capital gain to sell an individual taxi medallion ?
Submitted: 2 years ago.
Category: Tax
Expert:  Lev replied 2 years ago.
Hi and welcome to our site!Capital gain rates are based on total income - but reduced if the property is long term - owned more than a year. The maximum tax rate for long-term capital gains and qualified dividends is 20%, as amended by ATRA. For tax year 2015, the 20% rate applies to amounts above $12,300. The 0% and 15% rates continue to apply to amounts below certain threshold amounts. The 0% rate applies to amounts up to $2,500. The 15% rate applies to amounts between the two thresholds.
Customer: replied 2 years ago.
Hi, so does it apply just to real estate or all in general?
Expert:  Lev replied 2 years ago.
taxi medallion is not treated as real estate.The taxi medallion is section 197 intangible.
Expert:  Lev replied 2 years ago.
The difference is amortization/depreciation recapture - that is taxed as a regular income.
Customer: replied 2 years ago.
so if I sell it for $500T more - capital gain should be 20% from that amount?
Expert:  Lev replied 2 years ago.
Specifically for 2014 capital gain rates were reduced to 15% for taxpayers with total income below highest tax bracket - and 20% above that level.For 2015 - we are back to the old law - and capital gain will be taxed at 20% for the most of that amount.
Expert:  Lev replied 2 years ago.
In additional - if the asset was owned more than 15 years - it is fully amortized - and the original purchase price will be recaptured and taxed as regular income (not as capital gain) - but the rate woudl be not more than 25%
Expert:  Lev replied 2 years ago.
It is possible that 15% rate will be back for 2015 - for 2014 the law was signed at the end of the year only - but so far for 2015 - we still have the old law in effect.
Expert:  Lev replied 2 years ago.
If you are in 10%, 15% brackets Ordinary rate - 0% long term capital gain rate 25%, 28%, 33%, 35% brackets Ordinary rate - 15%39.6% bracket Ordinary rate - 20%Additional 3.8% federal Medicare tax applies to those with modified AGI above of $200,000 (single) or$250,000 (married/filing jointly).
Expert:  Lev replied 2 years ago.
the 39.6% bracket is following - Married Filing Separately ($228,800), Single ($406,750), Head of Household ($432,200), and Married Filing Joint Returns ($457,600).
Expert:  Lev replied 2 years ago.
In additional - because of large long term capital gain - you might be subject to AMT tax.So we may not simply based our estimate on the tax rate.If you provide your filing status, total income, deductions, etc - I will estimate your expected tax liability with and without the gain realized from the selling the taxi medallion.Please also consider - if you are selling on installments - that will allow to spread tax liability over several years and might reduce the total amount owned.
Expert:  Lev replied 2 years ago.
Just an illustration example - assuming you are single - standard deduction - no other deductions or credits - and your ONLY income is from $500k in long term capital gain - then
your estimated federal income tax liability would be
Regular tax $68535
Alternative minimum tax (AMT) $12077
Net Investment Tax $11400
Total - $92012
State and city taxes will be in additional.
However - your other income and deductions might affect these estimations.
Let me know if we need to adjust these estimations.
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