Maximum capital gains tax rate lowered to 20 percent from the current 28 percent. For individuals in the 15 percent bracket the capital gains tax rate has been lowered to 10 percent.

Rate changes are retroactive to any sale made after May 6, 1997. Installment payments made after the effective date are eligible for the new rates, even though the sale took place earlier.

New rates also apply in computing the alternative minimum tax.

Capital gains tax rate applies only to assets held "long-term". For assets sold after July 28, 1997, long-term means more than 18 months rather than one year.

Assets sold after May 6, but before July 29 qualify for the new 20 percent rate if they were held for more than one year.

• Assets sold after July 29 with a holding period of more than a year but less than 18 months will be taxed as "mid-term" gain at the old 28 percent rate.

A new rate structure has been created for assets held more than five years.

Gain on assets purchased after December 31, 2000, will be taxed at 18 percent

For those in the 15 percent bracket the rate is 8 percent on assets sold after December 31, 2000.

Gain from collectibles continues to be taxed at a maximum rate of 28 percent.

Maximum rate for real estate depreciation recapture will be 25 percent.

Gain from small business stock remains limited to the existing 50 percent exclusion (for an effective maximum rate of 14%).

As a result of these changes, gain from the sale of assets may be taxed at 8, 10, 14, 15, 18, 20, 25, 28, 31, 36, or 39.6 percent, depending on holding period, date sold, type of asset, and the amount of other income.

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