Collectibles
Long-term investments in collectibles are taxed at a flat 28%. Short-term investments in collectibles are taxed as short-term capital gains at your ordinary income tax rates. Collectibles include the following items:- stamps,
- coins,
- precious metals,
- precious gems,
- rare rugs,
- antiques,
- alcoholic beverages, and
- fine art.
Real Estate
Real property will be taxed either as a short-term capital gain, long-term capital gain, or ordinary gain, depending on how you used the property. Rental real estate will be taxed as a combination of capital gain and ordinary gain tax rates.Profits on real estate that is used as your primary residence may qualify for a very special capital gains exclusion of $250,000 or $500,000. If you are selling your main home, be sure to check out Taxes on the Sale of Your Home. If the real estate is not your primary residence, such as a second home, the real estate is treated as a short-term or long-term capital gain, depending on how long you have owned the house.
Business Assets
Fixed assets used in your business are taxed as ordinary gains. Business assets include all furniture, equipment, and machinery used in a business venture. Examples include computers, desks, chairs, and photocopiers. Ordinary gains are reported on IRS Form 4797.
Small Business Stock
Capital gains and losses on small business stock may qualify for preferential tax treatment. Gains may be partially excluded under Section 1202, Gain on Small Business Stock, if the company had total assets of $50 million or less when the stock was issued. Losses may be treated as ordinary losses up to $50,000 per year under Section 1244, Loss on Small Business Stock, if the company had total paid-in capital of $1 million or less.Small business investors can request that companies certify their stock as qualifying under Section 1202, Section 1244, or both, at the time they make an investment in the company.
Gains on small business stock are taxed at 28% after the partial exclusion. Ordinary losses on Section 1244 stocks can reduce other ordinary income, such as wages.
