Capital Gains Tax, Explained

The tax filing deadline is approaching, and there are quite a few new wrinkles in the Tax Code for individuals to consider.  Recently, I have fielded quite a few questions about the recent changes in how capital gains tax is calculated.  Here are the basics you need to know this tax season:

A capital gain is realized when a capital asset is sold or exchanged at a price higher than the price paid for that asset (or its “basis”). Basis is defined as an asset’s purchase price, plus commissions and the cost of improvements (if any), minus depreciation. 

A capital loss happens when an asset is sold for less than its basis. Capital gains and losses are not adjusted for inflation. 

Long term capital gains and losses occur if the asset was held for more than one year.  

Short term capital gains and losses occur if the asset was held for less than one year.  

So what are the capital gains tax rates?

The Tax Cuts and Jobs Act of 2017 changes things up quite a bit from the prior methods of capital gains taxation.  

Let’s first address an easy concept:  Short term capital gains are taxed at the same rate as ordinary income.  If you have bought and sold a capital asset within one year, you just pay your normal federal income tax rate on that gain.  

For long term capital gains, however, it not that straightforward. The long term capital gains tax rate is either 0%, 15% or 20%, depending on your income level. This is most easily described by the following chart:


Gains on the sale of artworks and collectibles are taxed as ordinary income up to a maximum 28 percent rate. 

How NOT to Interview a Job Candidate, the NFL Edition

The NFL Combine just took place last week in everyone's sort-of favorite convention city,  Indianapolis, Indiana.  A jarring news story came out of that event wherein an official from an unidentified NFL team asked a prospect, LSU running bank Darrius Geice, "if he liked men" during the interview.  Yes, according to the story as reported, an NFL team asked a potential employee if he was a homosexual in the job interview. 

While that by itself is startling - that an major employer like an NFL team - can be so foolish as to ask a blatantly illegal interview question to a job candidate, the response that one hears on sports talk radio is equally surprising.  Unbelievably, there are a fair amount of people out there who have no idea that this question potentially violates Title VII of Civil Rights Act of 1964

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A Reality Check for Content Creators With YouTube Channels

It's no secret that YouTube has effectively replaced television and the radio in terms of the distribution of content.  For my clients who have YouTube Channels, and use that revenue as part of their business strategy, there is a recent study from Offenberg University in Germany that holds that the average YouTube channel owner can't generate enough cash to crack the poverty line in the United States.

The language of the write up in Bloomberg I've linked to is bleak, but it is a bit overly glum in my opinion. 

While YouTube's payment rates are a bit opaque, to be kind, my advice to budding entrepreneurs and creators out there is that revenue from a YouTube channel should be part of your strategy, but not your entire strategy.  Every stable business is stable because it has multiple revenue streams, and that concept certainly applies in the new economy. 


Announcing The Creator Sessions

For those building a business in any creative industry, the business and legal landscape can be daunting.  But it doesn’t have to be that way!

Starting Jan. 24, attorney, musician and writer Bryan Tuk and ArtsQuest are teaming up to present a new monthly series for creators and entrepreneurs called The Creator Sessions.  All sessions will take place at the Banana Factory Arts Center, 25 W. Third St., Bethlehem, PA. 

“Helping creators and entrepreneurs in all industries succeed is one of the core principles of my law practice,” says Tuk. “Freelancers often feel as though they have very little support because of the prohibitively high cost of legal services.  

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Announcing Legal Boot Camp for Creatives

On January 24th, in partnership with ArtsQuest, I present Legal Boot Camp for Creatives, a one hour session where small business owners and creators can learn what steps they should take in order to protect their assets, organize their business and limit their liability when entering into business transactions.  If you are a freelancer and/or creator, this session is for you! 

Tickets are ON SALE NOW HERE. 

This is the first in a  monthly series with ArtsQuest that will continue through June 2018.  More details on the next sessions will be available soon.