John M. Hoffman & Associates CPAs

Frequently Asked Questions

Capital Gains and Losses

"Hoffman is always touting Capital Gain income as the best - why is this?"

Hoffman is talking about long term capital gains. He likes this kind of income as tax wise it is second only to tax free income on things like ROTH IRAs, tax free fringe benefits, and tax free sale of principal residence.

This is because the rate of tax is the lowest and there is no social security or self employment type tax associated with it.

When you compare the tax on the next $1,000 of capital gain income for most taxpayers to the tax on the next $1,000 of income for the self employed plumber (for example), the difference is ridiculous.

So when a person wants to complain about the capital gain tax on some windfall, they need to compare that with the tax on hard earned income that people have to pay.