Blog
August 1, 2018

Potential Changes to Capital Gains Taxation

The Trump Administration is aiming to reduce capital gains tax, not by reducing the tax rate, but rather by indexing cost basis for inflation. Like many things in the tax code, such a change seems relatively innocuous, but the reality of what it could mean is $100 billion in reduced tax revenues for Uncle Sam (and $100 billion more in taxpayers pockets) over the next decade if enacted. Essentially, the proposal is that cost basis for any capital asset (stocks, rental properties, machinery, etc) would be increased at the time of sale to account for the inflation-adjusted purchase price. So, for example, if you paid $10K for stocks 30 years ago that are now worth $100K, normally you’d have a $90K capital gain. If that $10K 30 years ago is the same as $20K today, then under the proposed scheme, your capital gain would be $80K ($100K – $20K).

As you might have guessed, this doesn’t have the support of Democrats as it is a tax cut almost entirely to the wealthy (or upper middle class), so normally I would say that it has no chance. Recent history, however, shows that may not stop Republicans from pushing this though. Thus, we’ll be keeping an eye on it for our clients.

About Dark Horse CPAs

Dark Horse CPAs provides integrated tax, accounting, and CFO services to small businesses and individuals across the U.S. The firm was founded to save small businesses (and their owners) from subpar accounting and tax services and subpar client experiences. These small businesses are Dark Horses among their larger and more well-known competition. Being a Dark Horse CPA means advocating for small businesses by bringing them the tax strategies and accounting insights previously reserved for big business. Get a quote today.

Share
Rotating wordsDark Horse logo

Get a personable & experienced CPA who will partner with you to achieve unparalleled results.

Get Started

Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any securities. The Dark Horse Advisor's website and its associated links offer news, commentary, and generalized research, not personalized investment advice. Nothing on this website should be interpreted to state or imply that past performance is an indication of future performance. All investments involve risk and unless otherwise stated, are not guaranteed. Be sure to consult with a tax professional before implementing any investment strategy. Investment Advisory Services offered through Dark Horse Advisors, LLC, an Investment Advisor registered with the State of Nevada. Registration does not imply a certain level of skill or training. 

Certain Investment Adviser Representatives of Dark Horse Advisors, LLC are dually registered with DFPG Investments, LLC as Registered Representatives of the broker-dealer and Investment Adviser Representatives of the Registered Investment Adviser. Securities offered through DFPG Investments, LLC member FINRA/SIPC.