CPA.. Capital Gains Question

Could be the 3.8% Obamacare tax, at least in part

Dates are correct. If this was being calculated at short term rates, it would fall in the 28% range for my wife and I.

I looked at a schedule D and it asks for transactions reported on a 1099-B. I haven’t received one (yet).

Your gain is probably triggering the 3.8% Medicare tax that has nothing to do with Medicare.

But your holding period should indeed be triggering cap gains treatment, so not taxed as ordinary income. In the 28% marginal bracket, I doubt you are anywhere close to the 20% CG rate, so you are likely at 18.8% on your gain.

57,500 x 18.8% = $10,810

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Could be 20% cap gains tax if your income is high enough

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Doesn’t look like he would hit that.

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Could be phasing out of credits/deductions due to higher income b/c of cap gain

Could be some combination of the above

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This is likely

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I am unfamiliar with the Medicare tax your speaking of (3.8%). I am naive I guess, I thought capital gains was a straight 15%.

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It’s an additional capital gains tax under the guise of “Medicare”- direct result of Obamacare. Make no mistake, it is just an increase to the capital gains rate for high earners. I believe it starts on cap gains over $250k for married filing jointly. So to the extent that this gain pushes your total income over $250k, the extra tax kicks in.

From the info you have, it doesn’t seem as though the entire gain would be subject to the extra tax, but it very well could have.

So in simple terms, if your AGI before the gain was exactly $250k, then all of the gain would be subject to the tax.

All of your other assumptions appear correct (seems like this is pushing your total liability a little high). However as others have mentioned, you may have been phased out of some credits/deductions you would have otherwise gotten because of the gain.