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2003 law didn’t alter corporate tax rate

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in Small Business Tax,Small Business Tax Deduction Strategies

Q: My C corporation sold a long-term gain property this past summer. The gain amounted to $24,000 (rounded off). Do we benefit from the reduction in capital gains rates? O.T., Cincinnati, Ohio

A: No. The reduction in the maximum long-term capital gain rate—from 20 percent to 15 percent for post-May 5, 2003 transactions—applies only to individual taxpayers. Corporations are taxed on their net capital gain at regular corporate income tax rates. Currently, the top corporate income tax rate is 39 percent, so the maximum tax on your gain could be as high as $9,360. One option: Your company can use capital losses to offset its capital gains. A net capital loss can be carried back three years or forward for up to five years.

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