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bess
Level 3
April 3, 2026
Question

irrevocable trust long-term capital gains being taxed as ordinary income

  • April 3, 2026
  • 1 reply
  • 15 views

Irrevocable trust with huge long-term capital gains.  Tax is being calculated using ordinary income rates. 

1 reply

abctax55
abctax55
Level 15
April 3, 2026

What is Sch D showing?

The trust benefit/threshold of $$ of capital gain taxed at zero is MUCH lower than with individuals. 

HumanKind... Be Both
B
bessAuthor
Level 3
April 3, 2026

True, but the capital gains are being taxed at 37%

abctax55
abctax55
Level 15
April 3, 2026

Did you follow the bouncing ball of the tax computation on page 2 of Sch D?

Are you looking at the tax summary and just seeing the 37% is the marginal tax rate for trusts?

What does the effective tax rate show?

Can't really help, without specific numbers... 

And I am 'ass-um-ing that you do have the correct dates entered/ or are forcing LongTerm treatment.

HumanKind... Be Both
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