1. The US taxes capital gains from the sale of assets as ordinary income. However, a maximum tax of 15% to 20% applies for purposes of regular and AMT income taxes on individuals (including trusts) with respect to ‘net capital gain’ - defined as the excess of net long term gains reduced by net short term losses. Long term gains or losses are those from assets held more than one year. The reduced maximum 15%/20% rate also applies to US dividends and foreign dividends paid by an issuer in an OECD treaty country or paid by companies whose shares are regularly traded on a foreign exchange.

2. Although the 20% rate applies to tax payers whose income is subject to the top rate ($600,000) (MJF), an additional 3.8% Medicare tax can apply to tax payers with AGI in excess of $250,000 with respect to the lesser of the excess or passive income including net capital gain.

3. Note that a non grantor (non income tax transparent trust) is taxed at the maximum rate of 37% at about $12,000 of undistributed taxable income and hence will pay a 23.8% tax on net capital gains.

4. With the exception of US real estate and US real property holding companies taxable to foreign sellers under FIRPTA, liability to capital gains tax is largely confined to US residents. Thus, a NRA’s sale of US stocks, bonds and funds is not subject to US income tax.

5. Donative transfers are generally not subject to capital gains tax (‘CGT’) as a rollover basis rule applies, except with respect to property received by inheritance. No loss is realized on related party transfers.

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