flatiron parent
Not on capital gains. At least in the US that’s only taxed at 15% with no tiering. The deck is stacked for the investment class
You’re wrong in many different ways:
- Long term vs short term
- different rates
- state capital gains taxes
In this case, with the receiver being a CA resident, he pays almost certainly more than 50% in taxes on this bounty.
I don't think big bounties are capital gains.
Even long term capital gain for “the investment class” is more like 20%. This is not even a capital gain - this is straight income at 35+
LTCG tax for the rich is more like 23.8%, when you include the net investment income tax of 3.8% (which I had two financial advisors miss).
Plus state income taxes.
If this is a reward or payment for services, it is taxed as regular income, not as an investment. The FICA tax (SS/Medicare) will either be payed by the payer (shown on W-2) or the payee as self-employment tax when filing a Schedule C.
Capital gains for higher earners are taxed at 20%, and also subject to the Net Investment Income Tax at 3.8%.