This coming January officially marks the three-year countdown before the axe falls on the lower individual capital gains rates now in place.Since May 6, 2003, thanks to the Jobs and Growth Tax Relief Reconciliation Act of 2003, gain from the sale of most long-term capital assets is subject to a maximum tax rate of 15 percent (5 percent for individuals in the 10 percent or 15 percent tax bracket). Starting in 2011, however, these rates are scheduled to revert to their former pre-May 6, 2003, levels of 20 percent and 10 percent, respectively. Nevertheless, before the party ends, a 0 percent rate will replace the 5 percent rate for tax years beginning after Dec. 31, 2007.

Unfortunately, not all capital gain shares in this dramatic tax reduction: gain on collectibles remains subject to a maximum rate of 28 percent, and unrecaptured Section 1250 gain continues to be subject to a maximum rate of 25 percent, both now and after 2010. The majority of capital gains subject to tax, however, are included in the favorable, but still officially temporary, rate reduction.

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