The following paragraphs explain changes to the tax treatment of
net capital gain. For more information, see chapter 4 in Publication
Elimination of 18-month holding period for
lowest capital gains rates. Beginning in 1998, you no longer have
to hold property for more than 18 months to be eligible for the lowest
capital gains rates. Now, in most cases, you only have to hold property
more than 1 year to be eligible for the 10% or 20% tax rate.
Sale of qualified small business stock.
Beginning in 1998, only one-half of a gain from the sale or trade of qualified
small business stock generally is taxable. See Exclusion of Gain From
Sales of Small Business Stock, earlier. The part of the gain that is
taxable generally is subject to the maximum capital gains rate of 28% (instead
of the 10% or 20% rate).
For more information about qualified small business stock, see chapter
4 in Publication 550.
Capital gain distributions. If you have
capital gain distributions, report them on Schedule
D (Form 1040). Do not report them on Schedule B (Form 1040).
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