If the parents plan to postpone a sale until 2008 when the child's capital gain rate could be zero, they have to make sure that he or she reaches 18 by then; otherwise, the gain will still be taxed
at the parents' (presumably higher) rate (see CCH, Tax Increase Prevention and Reconciliation Act of 2005: Law and Explanation, [paragraph] 210).
Prior to the tax law change, dividend income was taxed
as ordinary income, which could have been as high as 38.
Or you treat it like municipal bonds, whereby there is no deduction for saving, but the interest isn't taxed
The importance of this distinction gets at what I believe is the major problem with our current tax system, which is that some forms of income are taxed
two, three, or more times while others are not taxed
Since 1967, most Western European countries have been using VATs, under which a company is taxed
only on the value it adds to a product.
State Tax Comm'n, (8) this Court held a New York transfer tax that more heavily taxed
stock transfers if they occurred outside the state to violate the Commerce Clause.
However, resident aliens who hold green cards for 8 of the 15 prior years generally are taxed
at departure identically to citizens who relinquish their citizenship.
The ability to do "what-if" scenario planning, to see how specific transactions would be taxed
for better tax planning and cash management.
Without property taxes, many seniors would only be taxed
on their fixed incomes -- which often grossly underestimate how well-to-do they actually are.
By separating a wage return from other family financial activities, families would be taxed
without consideration for their ability to pay.
Payments to capital and labor are taxed
progressively at the individual level.
Adjusted gross income (AGI) over $115,000 for single taxpayers or $140,000 for married taxpayers is taxed