1202 favorable gain exclusion provision existed for regular income tax purposes, but at a lower exclusion percentage
(resulting in the unexcluded portion being subject to a 28% tax rate).
To calculate the tax due on the annuity's income stream, we must determine the annuity exclusion percentage
which is established when the contract is annuitized.
1202 exclusion percentage
will fall to 50%, and an alternative minimum tax (AMT) preference will further erode the exclusion's advantages.
Shares acquired after August 10, 1993, but before February 18, 2009, have a 50% exclusion percentage
Brown's exclusion percentage
for the annuity payments will be 60.
And the exclusion percentage
for the annuity payments is 60.
The 40-percent exclusion percentage
is reduced by 2 percent for each percentage point by which the value of the qualified conservation is less than 30 percent of the value of the land.
Because only 25% of the property's value was conveyed, the 40% exclusion percentage
must be reduced by 2% for each 1% by which the value of the easement is below 30% of the entire property value.
Since only 25 percent of the value was conveyed, the 40 percent exclusion percentage
is reduced by 2 percent for each 1 percent that the easement is below 30 percent of the value of the entire property.
27, 2010, the exclusion percentage
is 75%, and for qualifying stock acquired after Sept.
1, 2011, the exclusion percentage
increased to 100%.
1202 gain must be reported as such on the taxpayer's return by reporting 100% of the gain and then excluding the appropriate exclusion percentage
at the time of the gain (50% for stock acquired before February 18,2009, or after December 31, 2011; 60% for stock in certain empowerment zone businesses; 75% for qualified small business stock acquired after February 17, 2009, and before September 28, 2010; and 100% if the stock was acquired after September 27, 2010, and before January 1, 2012, and was held for more than five years).