RE:Sorry, Reddeer....call me still unconvinced...Hey PACKER__OK!!__NO Sympahty for Farmer JOE eh !!!!
Well HOW ABOUT Me With my 1990 Telus IPO Shares
Back in the Day ALL of US USED to HAVE a Capital Gains Tax BREAK
on 500K too ALONG With Farmer Joe
BUT That Was First REDUCED in 1988__And Then REPEALED Totally
in 1994
https://objectivefinancialpartners.com/understanding-the-1994-capital-gains-tax-election-2/ packerdriver wrote: You say "farm" and I think Ma and Pa Kettle posing with a pitch fork and I feel all warm an fuzzy...but the math IS the MATH !!!
5,500,000 today - 150,000 in 1971 = gross capital gain of 5,350,000
Less 1.25 million one time exclusion of ANY tax leaves 4.1 million adjusted gain
50% of first 250k =125,000
66% of balance = 2,623,500
(IF the higher inclusion rate ever becomes law)
Total taxable = 2,748,500
If "Farmer Joe" gets good advice he'll trigger the sale in early January so he has no other income that year and he coud run that amount of tax through all five tax brackets but I'll be lazy and just go with the max bracket of 33%
2,748,500 @ 33% = 907,005 tax owing/payable ( 16 months later if sale happens in January)
907,005 is 16.95% of his capital gain of 5,350,000 (STILL a lower % rate than working income)
It's hard for me to feel bad for "Farmer Joe" when he's got almost 4.6 Million sitting in his bank account when it's all done. (Federal tax only of course....but he's in Alberta, the lowest taxed province anyway)