Screen a capital gain for long-term or short-term treatment

Key facts

Human involvement

Yellow · Close supervision

How AI is used

Count the holding period from the facts and mark the gain long-term only if the asset was held for more than one year. List any gift, inheritance, or other exception the lawyer must open in the publications Topic 409 names.

What the lawyer must review

There is no federal discount that removes a percentage of a capital gain the way the Australian CGT discount does. 26 U.S.C. § 1222 defines a short-term capital gain as gain from the sale or exchange of a capital asset held for not more than one year, and a long-term capital gain as gain from a capital asset held for more than one year, in each case to the extent the gain is taken into account in computing gross income. Topic 409 states the same holding-period line and says a lower rate may apply to a net capital gain than to ordinary income. For taxable years beginning in 2025, the topic says the rate on most net capital gain is no higher than 15 percent for most individuals, that a 0 percent rate applies below the income level the topic states, and that 20 percent applies to the extent taxable income exceeds the 15 percent threshold. Net short-term capital gain is taxed as ordinary income. Collectibles are taxed at a maximum 28 percent rate.

Written for / version

United States versionUS