11th Hour

To reap the rewards of a lower capital gains tax cut, you must have sold assets, such as stock or a business, on or after May 7, 1997. Under the new law, the maximum capital gains tax rate of 20 percent applies to the sale of assets you hold for more than a year and sold between May 7, 1997, and July 28, 1997. For sales taking place after July 28, the new law requires you to hold the assets for more than 18 months to qualify for the 20 percent capital gains rate. (The law also sets up a "midterm gains" category so if you sold assets after July 28, 1997, and hold them for more than one year--but not more than 18 months--you'll still pay a maximum rate of 28 percent.) For taxpayers in the 15 percent federal income tax bracket, the capital gains rate is even lower: 10 percent.

The rate on short-term capital gains has not changed. Any profits on an asset you've held for 12 months or less are taxed at ordinary income tax rates of up to 39.6 percent. Before the year ends, "match up your capital gains against your losses," says Jacksack. This move will let you save even more on capital gains taxes since your losses will offset any gains you've realized.

This article was originally published in the December 1997 print edition of Entrepreneur with the headline: 11th Hour.