"Collectibles" Held Long-Term and Sold at a Gain Are Subject

question 101

Essay

"Collectibles" held long-term and sold at a gain are subject to maximum tax rate of 28%. An individual taxpayer recently sold an antique car for $40,000. The car had been held for several years and $30,000 was originally paid for it. Explain why the car is or is not a collectible.

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Definitions:

Ability-To-Pay Principle

A principle of taxation asserting that taxes should be levied according to an individual’s or entity’s capacity to pay.

Federal Employees

Individuals who work for the government of a federal state and are often subject to specific employment and benefits regulations.

National Defense

Governmental activities and military efforts aimed at protecting a nation against threats to its security and sovereignty.

Interest On Public Debt

The periodic payment that the government makes to the holders of its debt securities, reflecting the cost of borrowing money.