Hi Steve:

Reading your first post below, I encountered a difficulty with this paragraph:

Note: Most people pay a 0% tax rate on long-term capital gains and qualified dividends. (And most people for the record realize very little long-term capital gain or qualified dividend income.) And then everybody else pays a 15% tax rate.

Did you really mean a 0% rate there, or did you mean 20%? And in either case, how does this work? An explanatory sentence would be welcome.

Secondly, you make no mention of any possible changes in the little-publicized Obama-era tax law that allowed founders of businesses who hold their positions for five years or more to not pay any capital gains on their eventual exit (do I have that right? I only remember it vaguely at this moment).

Any word of plans to change that? Highly applicable to your example in the post.

Regards,

— R***

Great comments, so let me respond.

First my less than clear comment about the 0% long-term capital gains rate and qualified dividends rate is based on this reality. Most individual taxpayers pay either the 12% ordinary income tax rate or the 10% ordinary income tax rate. When someone pays 10% or 12% as their ordinary income tax rate, they pay a 0% long-term capital gains and qualified dividends tax. I also tried to point out that while these folks might pay a 0% tax rate, by definition they would probably often have modest investment income. For example, if someone works and earns $51K at job and gets $1K of capital gains, he or she pays a 0% capital gains tax rate. But there’s not much capital gains there…

Regarding the Section 1202 qualified small business stock, I think that would still exist as a way to sidestep capital gains taxes. More info here: http://evergreensmallbusiness.com/section-1202-qualified-small-business-stock-exclusion/ and here:http://evergreensmallbusiness.com/section-1202-qualified-small-business-stock-pitfalls/