Law and Daily Life

Can You Help Someone Commit Suicide?

2012-02-09T16:01:21Z

There's a lot of debate about assisted suicide. Should friends, family or physicians be able to help a terminally ill patient die? Is it wrong to commit suicide, or does it ensure dignity near the end of one's life?

Whatever your moral stance, assisted suicide is ultimately governed by law. When one asks whether they can help someone commit suicide, they're really asking whether it's legal under a state's assisted suicide law.

And in the United States, most of those laws say no.

In a pair of 1997 cases -- Washington v. Glucksberg and Vacco v. Quill -- the U.S. Supreme Court ruled that there is no constitutional right to assisted suicide. States are thus free to enact assisted suicide laws that ban the practice, or that permit it in limited circumstances.

In nearly every state (and the District of Columbia), assisted suicide is illegal by statutory enactment or common law. Whether done by a physician, family member or friend, aiding, advising or encouraging suicide is considered manslaughter or negligent homicide.

It would not be wise to assist a suicide in one of those states. You may face prosecution.

On the other hand, Oregon and Washington have assisted suicide laws that allow the practice when certain criteria are met. The Washington Death with Dignity Act allows physicians to aid competent yet terminally ill patients. There are waiting periods and consent forms to be signed. The Oregon Death with Dignity Act is very similar.

Even if you live in one of the few states without an assisted suicide law, you probably shouldn't help someone commit suicide. The practice is legally ambiguous and you might be opening yourself up to prosecution. Doctors in Oregon and Washington are the only people with assured immunity.

Related Resources:

Court strikes down Georgia's assisted-suicide law (CNN)
Assisted Suicide (FindLaw)
State of Washington 'Death with Dignity' Act Goes Into Effect Thursday (FindLaw's Common Law)

Making Recreational Pot Legal Now Seems Possible

2012-02-09T13:02:07Z

Washington State is poised to become the first state to legalize recreational pot use. On January 26, the Secretary of State certified Initiative 502, finding that supporters collected enough signatures to put the issue on the November ballot.

Polls show that 48% of voters support the ballot measure, while only 45% oppose it.

And if Washington doesn't legalize recreational pot this November, Colorado may. Activists fell about 3,000 signatures short of a ballot measure, but have until February 21 to collect the rest. It's not expected to be too difficult.

Pro-pot activists in California, Michigan and Montana are also collecting signatures in hopes of legalizing recreational pot, reports Time. If successful, all of these measures will be put to a vote within the next year.

But even if voters agree to legalize recreational pot use, there may still be criminal consequences for possession. In 2005's Gonzales v. Raich, the U.S. Supreme Court sided with the federal government, finding that it is ultimately in charge of drug policy.

As it stands, Congress has no plans to legalize pot -- for recreational or medicinal use. Agents with the Drug Enforcement Agency may still be told to destroy an individual's crop. Federal prosecutors may still choose to prosecute someone selling or growing the drug. This is possible even when an individual complies with state regulations.

So while the state may leave recreational pot users alone, the federal government may not. Ultimately, the only surefire way to legalize recreational pot use is to go through Congress.

Related Resources:

Marijuana legalization measure certified (Associated Press)
WA Voters May Soon Legalize Recreational Pot (FindLaw's Law & Daily Life)
Montana Medical Marijuana Stores Raided by Feds (FindLaw's Law & Daily Life)

Don't Freak Out if You Receive a 1099-C

2012-02-08T13:05:57Z

If you've received a Form 1099-C, don't freak out -- but don't ignore it either.

If a creditor has forgiven or canceled a debt of $600 or more, it is obligated to send you and the IRS a copy of this form. This includes debts discharged in bankruptcy and those forgiven by credit card companies.

Now that you know why you received a Form 1099-C, you need to determine whether or not you must pay taxes on the reported amount.

That's right, canceled and forgiven debt must be included in your gross income, which may ultimately increase your tax liability. Luckily, about 40 to 60% of people who receive a Form 1099-C (or the related 1099-A) aren't required to pay additional taxes, reports Business Insider.

As explained in IRS Publication 4681, you do not need to pay taxes on discharged debt when it falls into one of these general categories:

Student loans discharged as a result of your profession;

Most debts canceled in a Chapter 7, 11 or 13 bankruptcy court;

Debt cancelled while you were insolvent;

Some farm-related indebtedness;

Some real property-based business indebtedness; or

Mortgage modifications, short sales and foreclosures.

If your Form 1099-C debt is subject to an exclusion or exception, you're off the hook. However, you still need to fill out Form 982 and attach it to your tax returns. You don't want the IRS to assume you are illegally failing to report income.

If you're still not sure whether you need to include your Form 1099-C debt, consider talking to a tax preparer. It can often be a complicated analysis that requires professional help.

Related Resources:

The Mortgage Forgiveness Debt Relief Act and Debt Cancellation (IRS)
Foreclosure Tax Relief (FindLaw)
Federal Income Tax Laws and Regulations (FindLaw)

How Are Hookah Bars Still Legal?

2012-02-07T16:58:17Z

Are hookah bars legal?

That's the real question you should be asking, as the law treats hookah smoking and cigarette smoking the same, as they are both tobacco products regulated by the same statutes.

As cigarette smoking decreases, hookah use seems to be rising, particularly amongst the younger generations, possibly contributing to the perception that hookah bars are legal while cigarette smoking is not.

This is actually not the case, as many hookah bars operate illegally.

The reason for this is the state of smoking laws across the country.

Smoking bans operate on a city, county and state level, prohibiting tobacco smoking in workplaces, with minor exceptions.

In jurisdictions with such bans, hookah bars must fit into these exceptions in order to operate legally.

Where laws allow smoking in outdoor patios, restaurants and bars, it's quite possible that hookah bars are legal.

However, where the only major exception is for retail tobacco stores and smokers' lounges, a hookah bar may actually be illegal.

Again, this depends entirely on the jurisdiction.

For example, California requires such lounges and stores to primarily be in the business of selling tobacco and tobacco-related products. Having a license to sell tobacco products is not sufficient, and selling food often disqualifies an establishment.

Illinois is more specific, defining a retail tobacco store as an establishment that earns more than 80% of its revenue from tobacco products.

Now that you know the facts, keep in mind the following:

Hookah bars, legal or not, pose the same risks as establishments where cigarette smoking is permitted.

Related Resources:

Hookah use up sharply in California (Los Angeles Times)
Hookah Pipes and Water Pipe Smoking Injuries (FindLaw)
Smoking Bans Worked: Less Americans Smoking (FindLaw's Law & Daily Life)

Why the Tea Party Loves the 10th Amendment

2012-02-07T13:05:45Z

The 10th Amendment, the darling of the Tea Party, supports states' rights.

You've likely heard some version of this phrase invoked by presidential candidates and other politicians recently. It's referenced in debates about medical marijuana, gun control and health care reform. It's brought up when pundits speak about abortion legislation and the Defense of Marriage Act.

But what does the 10th Amendment mean? In legal terms, that is.

The text of the 10th Amendment states:

The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people.

Plainly read, the 10th Amendment gives states the power to legislate only when:

the Constitution does not prohibit such legislation, and
the Constitution does not give the federal government the power to enact the same legislation.

History suggests that the 10th amendment was not meant to measure the extent of federal power. When debating the 10th Amendment, both Houses of Congress refused to insert the word "expressly" before "delegated."

The founders thus rejected an amendment that would grant the states all power not "expressly delegated to the United States."

But if this is true, why are people invoking the 10th Amendment when speaking about states' rights? Why do they claim that the 10th Amendment limits federal power?

What they are actually saying is that the Constitution does give the federal government the power to take a disputed action. Because Congress can't act, states are entitled to such power under the 10th Amendment.

Therefore, those who invoke the 10th Amendment mean to say that Congress has no legal authority to act. It's only in a roundabout way that the 10th Amendment supports states' rights.

Related Resources:

A States' Rights Battle over Light Bulbs (Businessweek)
Tenth Amendment (FindLaw)
Why the Tenth Amendment "Nullification" Arguments Against the Stimulus Bill Are Sheer Folly (FindLaw's Writ)

CA Prop. 8 Gay Marriage Ruling Set for Tuesday

2012-02-07T03:11:56Z

A federal appeals court is set to release its long-awaited ruling Tuesday on California's Proposition 8, a ballot measure that barred same-sex marriage in the nation's most populous state.

But the Ninth Circuit Court of Appeals' Prop. 8 ruling, set for release at 10 a.m. Pacific Time, will likely not end the same-sex marriage debate. All parties expect the Ninth Circuit's decision to be appealed to the U.S. Supreme Court, NPR reports.

Here is some background about Prop. 8, and some possible outcomes in the Ninth Circuit's Prop. 8 ruling:

California voters in 2008 approved Prop. 8, which amended the state Constitution to read: "Only marriage between a man and a woman is valid or recognized in California." California's Supreme Court upheld Prop. 8 as constitutional in 2009.

But in federal court in 2010, Judge Vaughn Walker ruled that Prop. 8 violated the U.S. Constitution's due process and equal protection clauses. Prop. 8's sponsors appealed Walker's ruling to the Ninth Circuit.

The Ninth Circuit's ruling tomorrow may:

Affirm Judge Walker's Prop. 8 ruling. If this happens, Walker's lower-court decision will stand. Prop. 8 will be struck down as unconstitutional, and same-sex marriage in California will once again be allowed.
Reverse Judge Walker's ruling. If this happens, Prop. 8 will stand, and California's statewide ban on same-sex marriage will continue.

After Judge Walker's ruling in 2010, Prop. 8 supporters also challenged Walker's role as an impartial judge. Because Walker is gay, he should have recused himself from the Prop. 8 cases, the ban's supporters argued. But another federal judge dismissed the challenge.

Tuesday's Ninth Circuit Prop. 8 ruling will be posted at the Ninth Circuit's website. We'll post the official court documents at FindLaw's Courtside blog as well.

Related Resources:

Gay marriage: Appeals court to decide fate of Prop. 8 on Tuesday (Los Angeles Times)
Perry v. Brown/Coleman v. Brown "Proposition 8" (Ninth Circuit Website)
A Preview of Possible Outcomes of the Upcoming Proposition 8 Argument Before the U.S. Court of Appeals for the Ninth Circuit (FindLaw's Writ)
Prop 8 Standing: Proponents Have Right to Appeal Says Court (FindLaw's Decided)

Josh Powell Case Ignites Custody Questions

2012-02-06T20:25:39Z

A Washington state agency is set to review Josh Powell's child-custody case after a scheduled visitation ended in a deadly house explosion. Powell and his sons, ages 5 and 7, were killed.

"We really look at the service delivery with the case. Was there anything we can learn about what happened?" a deputy director with Washington's Children's Administration told The Seattle Times.

Josh Powell's struggle to regain legal custody of his sons apparently led to the explosion that investigators believe was a murder-suicide. The custody fight was the latest hardship to hit Powell since the unsolved disappearance of his wife Susan three years ago:

Josh Powell reported Susan missing after taking his sons on an impromptu camping trip in Utah in December 2009, the Los Angeles Times reports. Powell was named a "person of interest" in Susan's disappearance, but her body was never found. The next month, Powell and his sons moved in with Powell's father Steve in Washington State.

In September 2011, Steve Powell was arrested in connection with voyeurism and child pornography. Because of the charges, a Washington court granted temporary custody of Josh Powell's children to their maternal grandparents. Josh Powell got supervised visits -- twice a week, three hours at a time.

What happened at Sunday's visitation is being scrutinized. The worker who supervised the visit was not a Child Protective Services employee, but rather a private contractor, a CPS spokeswoman told The Seattle Times.

At the visit, Powell's kids ran ahead to meet their father, who then slammed the door before the contractor could step into the house. The contractor smelled gas just before the house blew up; an email from Powell to his attorney read, "I'm sorry, goodbye."

Josh Powell never showed any signs he would hurt his children, the CPS spokeswoman said. Otherwise, "we wouldn't have taken the children over there."

The children's maternal grandparents aren't blaming the state either, their lawyer told the Associated Press. They suspect Josh Powell used his scheduled visitation to silence his children: The eldest son allegedly told his grandparents that Susan Powell was "in the trunk" the night their father took them camping.

Related Resources:

Could Wash. have done more to protect Powell boys? (The Associated Press)
Attorney: Missing mom was 'in the trunk' boy said before his death (MSNBC)
Child Custody and Visitation Information by State (FindLaw)
Browse Child Custody Lawyers by Location (FindLaw)

JFK Signed the Cuban Trade Embargo 50 Years Ago

2012-02-06T17:04:04Z

On February 7, 1962 -- fifty years ago -- President John F. Kennedy signed the Cuban Trade Embargo, strengthening a partial embargo that had existed since 1960.

The new terms of the Embargo would end almost all ties between the two governments. It would cut off trade and travel to Cuba; freeze Cuban assets in the U.S.; and impose sanctions on nations that offer assistance.

It would thoroughly weaken Fidel Castro's Communist regime.

The Cuban Trade Embargo has undergone some changes in the last 50 years. Entitled the Cuban Democracy Act, it was officially codified into law in 1992. Congress wished to make the Embargo permanent since there were few signs that Cuba was moving towards a democratized regime.

In 1996, Congress would pass the Helms-Burton Act, which imposed more restrictions on American citizens doing business in or with Cuba. It also imposed penalties on foreign companies and countries trading with the nation.

The U.S. has repeatedly come under fire for the latest of these additions. The U.N. General Assembly has adopted twenty consecutive resolutions calling for an end to the Cuban Trade Embargo. Its members believe the U.S. is overreaching, impinging on other nations' sovereignty.

Following in the footsteps of those before him, President Obama has refused to budge. Instead, his representative told the U.N. General Assembly that Cuba received $3.5 billion in U.S. goods in 2010. The U.S. also sent $861 million in humanitarian aid. It is Cuba -- not the U.S. -- that needs to change.

Whether that change will come is unknown. But in the meantime, the Cuban Trade Embargo looks like it's here to stay.

Related Resources:

How Cuba's Oil Find Could Change the US Embargo (TIME)
Travel to Cuba (FindLaw)
Who Can Legally Travel to Cuba? (FindLaw's Law & Daily Life)

CA Woman Wins $10K in Honda Small Claims Suit

2012-02-03T13:04:12Z

Heather Peters won her Honda small claims lawsuit on Wednesday, earning a $9,867 judgment from a California state judge.

Peters brought the small claims suit after opting out of a proposed settlement in a Honda class action. The company was accused of overstating the fuel economy associated with its hybrid vehicles.

To settle those claims, the car manufacturer proposed a $200 settlement. It would also provide covered hybrid owners with a $1,000 nontransferable credit towards a new car.

Peters got the better deal, and actually received almost all of what she asked for -- the $10,000 small claims maximum under state law.

Her case was somewhat solid, too. In a 26-page order -- a rare action for a small claims case -- the judge wrote "Honda was aware ... there were problems with [the car] living up to its advertised mileage."

It would be nice for Heather Peters if the Honda small claims lawsuit ends here. She could take her money and move on with her life. But Honda has the option to appeal -- something the Los Angeles Times reports it is considering.

In most states, defendants can appeal a small claims case to a higher court. In California, a small claims appeal is heard by a different Superior Court judge. Different rules apply during an appeal, which means parties may bring in expensive attorneys.

The possibility of an appeal is thus something you should seriously consider when filing a small claims case against a corporation or someone with money. The stakes are small, but an appeal can be used to bully you into settling for a smaller amount.

But don't worry about Heather Peters. The former attorney appears fit to handle a Honda small claims appeal.

Related Resources:

Woman wins small-claims suit over Honda hybrid mpg (Associated Press)
Small-Claims Court (FindLaw)
When to Opt-Out of Class Action and Go to Small Claims (FindLaw's Law & Daily Life)

Super Bowl Gambling: Illegal or Harmless Fun?

2012-02-02T12:59:29Z

Millions of Americans will tune in February 5 to see the Giants and Patriots play in Super Bowl 46. Some might even want to wager a bit of money on the game. Which begs the question -- is Super Bowl gambling illegal? The answer may hinge on whether or not your state has social gambling laws.

It's an issue that is important to many sports-loving Americans. After all, an estimated half of all adult Americans bet on the Super Bowl.

Bets range in terms of size and scope. Some may choose to play in an office pool and buy squares. Others may choose to place sizable sums on a team through sportsbooks.

The aggregate amount of betting on the Super Bowl in 2010 was $82 million in Nevada. This doesn't even count all the bets occurring in offices and homes across the nation.

This year likely won't prove too different. Yet some may be surprised to find out that even an innocuous office pool may be illegal. It might even be the reason you get fired. Verizon dismissed six workers in Taunton, Massachusetts in 2011 over their participation in an office Super Bowl pool. The company thought their actions amounted to illegal gambling.

Gambling is illegal in most states. But some states allow an exception for social gambling. Social gambling is usually defined where the betting takes place in a purely social context. The individuals previously know each other. There is also no profit-making involved -- as in, no bookies.

So in most cases, casual bets with friends would qualify under the social gambling exception.

It might be wise to check up on your state's statutes before you whip out your checkbook. Not all jurisdictions have social gambling laws. Remember: Super Bowl gambling can be illegal. So try your best not to break the rules this weekend.

Related Resources:

State Gambling Laws (FindLaw)
Online Gambling (If Now Legal) May Be Big in 2012 (FindLaw's Free Enterprise)
Super Bowl Seating Lawsuit Should be Tossed, Cowboys Argue (FindLaw's Tarnished Twenty)
Court Throws Out CBS's Janet Jackson Super Bowl 'Wardrobe Malfunction' (FindLaw's Tarnished Twenty)

Washington Can Legalize Pot on Nov. Ballot

2012-02-01T16:02:51Z

Voters in Washington state are set to decide on a proposal that would legalize marijuana possession for non-medical use and authorize its sale in state-run stores.

Initiative 502, which supporters call "a new approach to marijuana," qualified for November's statewide ballot Friday after a months-long petition drive, Reuters reports. If approved, I-502 would make Washington the first U.S. state to legalize both medical and non-medical pot.

The new pot law would come with limits, however. Here's what I-502, Washington's marijuana-legalization initiative, would actually do, according to the New Approach Washington campaign:

Allow adults 21 and over to legally possess up to 1 ounce of marijuana for any purpose -- medicinal or non-medicinal.
Allow adults 21 and over to legally possess up to 16 ounces (1 pound) of marijuana-infused solid products like cookies and brownies.
Allow adults 21 and over to legally possess up to 72 ounces (4.5 pounds) of marijuana-infused liquids like teas and lotions.
Require all marijuana sold in Washington to be produced in-state.
Require all marijuana to be sold at licensed state-run stores.

Washington's marijuana legalization initiative would also create a new threshold for marijuana-related DUIs. For adults 18 and over, the limit would be 5 ng/mL of blood concentration of THC, the main psychoactive element in marijuana. For drivers under 18, legal limit would be zero.

I-502's backers say the proposal will protect medical marijuana patients from being wrongly arrested or prosecuted under Washington's state laws. But because federal laws make no exception for marijuana, anyone who uses the drug -- with a prescription or without -- still risks facing federal charges.

Washington's marijuana legalization initiative isn't the first -- California voters rejected a similar legalization push in 2010. Meantime, pot-legalization advocates are also pushing for a ballot measure in Colorado this fall.

Related Resources:

Marijuana legalization on the November ballot in Washington state (National Post)
States Legalize Marijuana, Clash with Federal Government (FindLaw)
Smoke 'Legal' Medical Pot, Still Get Arrested by Feds (FindLaw's Blotter)
State Marijuana Laws (FindLaw)

British Tourists Deported Over Twitter Jokes

2012-02-01T13:03:29Z

If you've been making anti-American jokes on Twitter, it's time to stop. The Department of Homeland Security may be after you.

British tourists Leigh Van Bryan, 26, and Emily Bunting, 24, were stopped at Los Angeles International Airport last week after going through customs. Agents arrested the pair and interrogated them for 12 hours.

They were then deported over Twitter jokes.

Those jokes were made by Bryan, who tweeted at a friend, "Free this week, for quick gossip/prep before I go and destroy America?"

He was trying to make plans before he went on vacation. "Destroy" is slang for "party," according to the New York Times.

Federal agents didn't believe his explanation, or that he didn't really plan to be "diggin' Marilyn Monroe up" while here, reports ABC News. Investigators apparently asked Bunting if she was going to be Bryan's lookout while he went for the body.

Okay, so you probably already knew that the Department of Homeland Security lacks a sense of humor. But how did it find these joking Tweets?

No one knows, but the department does have an office that focuses on "Publicly Available Social Media Monitoring and Situational Awareness." It's also working on an application that would scan social media for certain key words and phrases, according to the New York Times.

Though U.S. citizens can't be deported over Twitter jokes, they can be hauled in for questioning if picked up by this scanning application. So be careful what you Tweet or share on social media.

Related Resources:

Lost In Translation: Because Of Twitter Joke, Brits Denied Entry To U.S. (NPR)
Fifth Amendment Right Against Self-Incrimination (FindLaw)
Is Homeland Security Watching You Online? (FindLaw's Technologist)

Legal for Moms to Let Kids Get a Tattoo?

2012-01-31T13:03:45Z

A Georgia mom arrested for letting her 10-year-old son get a tattoo claims she didn't know it was illegal. But police have an inkling that's not completely true.

Chuntera Napier, of Acworth, Ga., faces charges of child cruelty and being a party to a crime in connection with her son's tattoo. "I always thought that if a parent gave consent, then it's fine," Napier told The Atlanta Journal-Constitution.

But when it comes to tattooing children, Georgia's law states otherwise -- and police say Napier probably knew it.

Chuntera Napier claims her son Gaquan, 10, wanted a tattoo like hers, to honor his older brother who was struck and killed by a motorist. Someone at school saw Gaquan's tattoo and called authorities, the Journal-Constitution reports.

Chuntera Napier was arrested in connection with violating a Georgia law, enacted in 2010, that prohibits tattooing anyone under 18, except by a doctor. But despite Napier's claims, she probably knew about the underage tattoo ban, Acworth's police chief told ABC News.

The chief suspects Napier first took her son to a licensed tattoo artist, but was likely turned away because of Georgia's law. Napier then took her son to get inked "illegally like a 'jail house' tattoo," he surmised.

While Napier's tattoo looks professional, her son's looks "to be the work of an amateur," the police chief said.

Georgia is not alone in outlawing tattoos on children. At least 39 states have similar laws, according to the National Conference of State Legislatures. Other states prohibit children from getting tattoos unless a parent approves. Violations could result in fines or jail time.

Chuntera Napier was released from jail, and insists she shouldn't be charged with anything related to her son's tattoo. "He's my child, and I have the right to say what I want for my child," Napier told the Journal-Constitution. Her next court hearing is set for March.

Related Resources:

Chuntera Napier, Georgia Mom, Arrested For Allowing 10-Year-Old To Get Tattoo (The Huffington Post)
Tattoos and Body Piercings for Minors (National Conference of State Legislatures)
Child Abuse Laws State-by-State (FindLaw)
Gang Member Tattoos Murder Scene on Chest, Gets Convicted (FindLaw's Legally Weird)

School Bans Ugg Boots Over Cell Phone Smuggling

2012-01-30T13:04:28Z

Pottstown Middle School has started a unique clothing ban for an even more unique reason. The Philadelphia-area school recently instituted an Ugg ban over cell phones.

The ban actually encompasses all "open top boots." Students may still don the fur-lined footwear but must change into different shoes before class.

Apparently some clever teens were using the boots to smuggle in prohibited items -- including cell phones. Cell phones are permitted in the school. Except students must turn them off and keep them in their locker between 7:55 a.m. and 2:30 p.m., reports The Mercury.

Except some students were managing to sneak phones into classrooms --through their shoes.

Unsurprisingly, students were displeased with the new rule. The Mercury posted news of the ban on their Facebook page and received many comments. Only a few were actually supportive. One individual commented that the boot restriction was "absurd."

Others expressed their belief the ban would be unproductive. Students could still try to sneak in phones in other places like socks and bras.

Most states permit dress codes in schools with certain caveats. Dress codes usually cannot be unreasonable or discriminatory.

Banning Uggs does not seem like it would be unreasonable or discriminatory. Students will still be allowed to wear them outside classrooms -- just not inside. One school official even made an analogy. He said the ban was similar to asking students to take off their hats in class.

Other boots will still be permissible. Only those shoes dubbed "open top" are not allowed. This means students can still wear tight lace-up boots.

Will the Ugg ban really eliminate cell phones in classrooms? That remains to be seen. Pottstown Middle School's policies only recently went into effect.

Related Resources:

Pennsylvania District Bans Fur-lined Boots Over Cellphones (Huffington Post)
Ten Commonly Asked Questions on Student Rights (FindLaw)
Florida to Ban Saggy Pants in School? (FindLaw's Law & Daily Life)
Could UGG Boots Cause Foot Fungus, Back Pain? (FindLaw's Injured)

Capital Gains Tax Isn't Just for Rich People

2012-01-27T14:01:22Z

Presidential candidate Mitt Romney's tax returns have called attention to capital gains. As you probably now know, capital gains are usually taxed at a lower rate than other types of income -- but they're not just for the super-rich.

Anyone with a capital asset can claim a capital gain when that asset is later sold, according to the Internal Revenue Service. A "capital gain" is how much money you made by selling the asset. (However, if you lost money in the deal, and it's investment property, it's called a "capital loss.")

So what is considered a capital asset? And can you claim the sweet 15% capital-gains tax rate like Mitt Romney does?

The answer depends on many factors, and involves some arithmetic. Here's what the IRS says about capital gains and taxes:

Almost all of your property, held personally or as an investment, can be considered capital assets.
When a capital asset is sold, the difference between the sale price and your basis (usually the purchase price) is a capital gain or loss.
If you held the capital asset for more than a year, your gain or loss is considered "long-term." Otherwise, it's "short-term."
Subtract your long-term losses from your long-term gains -- that's your net long-term capital gain.
Add up your short-term capital losses, and any long-term capital losses carried over from last year. Subtract these losses from your net long-term capital gain to get your "net capital gain."

Net capital gains are taxed at different rates for different taxpayers. The maximum rate for most people is 15%, but for those with lower incomes it could be as low as zero. However, some types of net capital gain may be taxed at higher rates of 25% or 28%.

See how complicated it can get? That's why it may be wise to consult a tax attorney about your best options for reporting capital gains on your taxes, even if you're not as rich as Mitt Romney.

Related Resources:

Mitt Romney's tax returns highlight capital gains tax and need for overall tax reform (Chicago Tribune Editorial)
Ten Important Facts About Capital Gains and Losses (Internal Revenue Service)
Family Tax Matters: Capital Gains, Filing Status, Deductions and Alimony (FindLaw)