Replies to post #196907 on Zeev's Turnips Patch-No Politics (ZEEV)

[warawls]

Zeev and Board, Does anyone have a good link about nanotechnology? I have a basic uderstanding, but I was trying to explain it to some friends and found it very hard to do.
Also, any links about how the nanotech stocks are predicted to do? I know they will do well, but I'd like to some articles on the stocks too.

Thanks for your help,
Ashley

[MONYMAN3]

Zeev, I believe the following applies to regular equities since the tax law changes made effective on May 6, 2003:

"The law also includes special rates for property held more than five years, but these rates are now superseded by the 5% and 15% rates."

In addition, under the prior law (as best I can recollect)effective in 2001 required the taxpayer to make a "deemed sale" of his/her gains, pay the taxes on that constructive sale, and then and only then would the 5 year time period start to run. Assets held before the 5 year law was passed and not "deemed sold" could not be considered for the 5 year preferential cap gains treatment. Of course assets purchased prospectively after the enactment of the 5 year rule would qualify if 5 years have passed prior to May 6, 2003 (which if you note the effective dates is impossible therefore negating any use of the 5 year rule now anyway) Under the 5 year rule, taxpayers in the 15% marginal tax bracket who did hold an asset for 5 years or more could avail themselves of a 8% long term capital gains rate (down from their normal l/t capital gains rate of 10%) Taxpayers who's marginal tax rates were higher than 15% (for assets acquired after 2000 or "deemed sold" on you 2001 return) could apply an 18% long term capital gains rate on those particular assets.

FWIW
Rob

[brainlessone]

1202 is actually more interesting: you can roll over your gain tax free if you put it back to work in the same kind of investment and then take the 5% 5 year present gain, at least that is how cpa says


even more interesting: wht if you assign a patent, a nice capital asset and hav a contingent milestone payment 6 years out. that too is a capital gain

[phill]

Zeev, this on 1202?

Exclusion of Gain on Qualified Small Business (QSB) Stock

Section 1202 allows for an exclusion of up to 50% of the eligible gain on the sale or exchange of QSB stock. The section 1202 exclusion applies only to QSB stock held for more than 5 years.

To be QSB stock, the stock must meet all of the following tests.

* It must be stock in a C corporation (that is, not S corporation stock).
* It must have been originally issued after August 10, 1993.
* As of the date the stock was issued, the corporation was a domestic C corporation with total gross assets of $50 million or less (a) at all times after August 9, 1993, and before the stock was issued and (b) immediately after the stock was issued. Gross assets include those of any predecessor of the corporation. All corporations that are members of the same parent-subsidiary controlled group are treated as one corporation.
* You must have acquired the stock at its original issue (either directly or through an underwriter), either in exchange for money or other property or as pay for services (other than as an underwriter) to the corporation. In certain cases, you may meet the test if you acquired the stock from another person who met the test (such as by gift or inheritance) or through a conversion or exchange of QSB stock you held.
* During substantially all the time you held the stock:
1. The corporation was a C corporation,
2. At least 80% of the value of the corporation's assets were used in the active conduct of one or more qualified businesses (defined below), and
3. The corporation was not a foreign corporation, DISC, former DISC, regulated investment company, real estate investment trust, REMIC, FASIT, cooperative, or a corporation that has made (or that has a subsidiary that has made) a section 936 election.

from 2003 sched D instr:
http://www.irs.gov/instructions/i1040sd/ch01.html#d0e702


but also:

The 50% exclusion of gain from sale of qualified small business ("QSB") stock under Section 1202 has been retained. However, those gains are still taxed at a nominal rate of 28%, with the result that the effective tax rate on QSB stock remains at 14%.

from: http://www.mmblaw.com/articles_and_updates/2003_tax_act.html


and here's extended discussion including rollover and AMT:
http://www.groco.com/readingroom/smbusstock.html

regards,

phill