Allocation of assets.
Changes have been made to the order in which you must allocate
assets in a multiple property exchange and a sale of a business
occurring after March 15, 2001. See Residual group under
Multiple Property Exchanges in chapter 1 and Residual
method under Sale of a Business in chapter 2.
Lower capital gain tax rates.
Beginning in 2001, the 10% capital gain tax rate is lowered to 8%
for qualified 5-year gain.
Beginning in 2006, the 20% capital gain rate will be lowered to 18%
for qualified 5-year gain from property with a holding period that
begins after 2000. Taxpayers (other than corporations) can elect to
treat certain assets held on January 1, 2001, as sold and then
reacquired on the same date, but they must pay tax for 2001 on any
resulting gain. The purpose of the election is to make any future gain
on the asset eligible for the 18% rate by giving the asset a new
For the definition of "qualified 5-year gain" and information
on how to make the election, see Capital Gain Tax Rates in