CAPITAL GAINS

   The maximum tax rate on net capital gain (i.e., net long-term capital gain reduced by any net short-term capital loss) has been reduced from 20% to 15% (and from 10% to 5% for taxpayers in the 10% and 15% tax rate brackets) for property sold or otherwise disposed of after May 5, 2003 (and installment sale payments received after that date).  The reduced rate applies for both the regular tax and the alternative minimum tax.  The higher rates that apply to unrecaptured section 1250 gain, collectables gain, and section 1202 gain have not changed.

Note: Fiscal year 2002-2003 estates should see Announcement 2003-56 for special rules for filing Schedule D (Form 1041), Capital Gains and Losses, and Form 1041, U.S. Income Tax Return for Estates and Trusts, 12-SEP-2003.