Tax question regard 2008 capital gain rate
So everybody knows that the LTCG tax rate is 0% next year if you
are in the 15% bracket, 15% if in 25% or higher. My question is:
Joe Taxpayer is single, has no income, sells stock and makes
$40K in LTCG (assuming $40K is the 15% limit, and ignoring the
10% and 0% rates on the first 15K or so), Joe will pay NO taxes.
So now later in the year, Joe wins the lottery and gets $40K in
earnings, the question is what will his taxes be:
25% of the lottery earnings and 0% on the LTCG,
15% of the lottery earnings, plus 15% on the LTCG, hence a
tax rate of 30% on the lottery earnings,
25% of the lottery earnings, and 15% on the LTCG, hence a
tax rate of 40% !!
or something else?