What are the rules for taxation of capital gains?
Capital gains taxation is a complicated area of international tax law, and this answer will focus primarily on taxation of capital gains in California at a 10th-grade level. Capital gains refer to the profit made from the sale of an asset, such as stocks, bonds, or real estate. In California, capital gains are taxed at the same rate as ordinary income, which means that the amount of tax paid depends on your total adjusted gross income. For example, if your total adjusted gross income is less than $101,000, then your capital gains taxes will be the same rate as your federal income tax rate. Anything over $101,000 is subject to an additional rate of up to 13.3% for California residents. If you are a non-resident of California, then you are subject to a flat tax rate of 8.84% on capital gains from the sale of real estate and 7.5% on capital gains from the sale of other assets. In addition, gains from the sale of collectibles are subject to a 10.3% tax rate. In general, you must report any capital gains to the IRS when filing your taxes. It is also important to keep detailed records of all purchases and sales related to the asset in question, as these records will be used to calculate your capital gains and any applicable taxes owed. Finally, keep in mind that certain types of capital gains may be eligible for deductions or tax credits, which may reduce your overall tax liability.
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