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We went in for our annual "what's the damage" meeting with our CPA
yesterday, and it wasn't pretty. What surprised me the most was the
tax rate on my trading profits.
The CPA showed us two cases, with and without my trading. He knows
about and used the 60/40 split on futures trading profits. In spite
of that, the taxes on my profits amounted to almost 37%!! That
includes state taxes, but the state tax rate is no more than 5%.
I'm having trouble finding what the long/short term rates SHOULD be,
but according to http://www.irs.gov/prod/tax_edu/teletax/tc409.html
and page 61 of form 550 (http://ftp.fedworld.gov/pub/irs-
pdf/p550.pdf) the "highest tax rate on a net capital gain is
generally 20%." We're in a high bracket but I thought 20% was still
the max for cap gains.
Can somebody shed some light on this? What tax rate should I expect
on my profits?
Thanks,
Gary
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