How Do Capital Gains and Investment Income Create Complex Tax Exposure?
Investment income and capital gains are increasingly becoming a source of individual wealth in North America and Western Europe. Though these sources of income may help improve trade long run financial positions, they also come with complexities of tax that have been understated. The following are some of the questions that demonstrate how the amount of income that is associated with investment may raise tax exposure in the event that it is not addressed properly. Why are capital gains taxed differently from regular income? Taxation of capital gains depends on the duration in which the asset is held before it is sold. Ordinary income tax rates usually apply to short-term gains, and reduced rates are usually available on long-term gains. Poor interpretation of holding periods or characterization of gains merely leaves underpaid taxes and draws the attention of tax agencies. Experienced IRS tax experts (former IRS tax agents, former auditors , and experienced tax attorneys in Sa...