Capital Gains Tax question.

[wannaberocker]

Hey guys i was thinking About the Capital Gains Tax last night and wasnt sure about a certain aspect of it. So i thought id ask the question here.

Questions;
1. Is the cap gains tax required even on a loss? Or is it simply reserved for gains in the market?

2. I understand that Cap gains on top of income tax is essentially a double tax. Yet, where would we put people like CEO's of sometimes only get paid in stock options?

3. Does the govt (IRS) consider Inflation when dealing with Cap Gains? For example if i invest $1000 in stocks and then a year later i sell the stocks for $1000. But in that year period inflation has gone up 2 % would the IRS factor that in or no?

Anyways, what do ya guys think about Caps gains tax, should it be eliminated or increased or what?

[angelatc]

1. A loss isn't a gain. Capital losses can be written off in certain circumstances. (http://www.bankrate.com/finance/money-guides/capital-losses-can-help-cut-your-tax-bill-1.aspx)

2. That makes no sense to me. Capital gains aren't taxed as income. You may be thinking that corporate income tax is considered double taxation because the dividends are taxed as profit, then again as capital gains to the stockholders, but that's not entirely relevant to the conversation at large. Compensation in the form of stock options is taxed according to a special set of compensation laws, (http://www.irs.gov/publications/p525/ar02.html) but isn't considered capital gains, per se.

3. No, there is no write off for inflation.

Personally, I'd prefer to abolish the income tax, while retaining some form of the capital gains tax.

[VBRonPaulFan]

1 and 3 were basically covered above. #2 would be considered a 'taxable fringe benefit' that is reported separately and is supposed to be reported on your tax return.