As a result of the 2003 tax-cut bill, long-term capital gains for 2003 are taxed differently depending upon whether the transaction took place before May 6 or after May 5. The lower preferential capital gains rates do not apply to gain from collectibles (stamp collections, coins, art work, etc.) or gain attributable to depreciation recapture on sales of certain real estate.

Pre-May 6 Sales:

• If your marginal rate is 15% or under -- Your long-term capital gains rate will be 10% for property held longer than one year but not over five years, and 8% if the property was held more than five years.
• If your marginal rate is above 15% -- Your long-term capital gains rate will be 20% for property held longer than one year. There is no reduced tax rate for capital assets held more than five years.

Post-May 5 Sales:

• If your marginal rate is 15% or under -- Your long-term capital gains rate will be 5% for property held longer than one year.
• If your marginal rate is above 15% -- Your long-term capital gains rate will be 15% for property held longer than one year.

Since the new 5% / 15% rates, which apply to gains from capital assets held for more than one year, are lower than the 8% / 18% rates that had applied to five-year gains, there is no longer a tax benefit to holding assets longer than a year and a day.