An individual taxpayer received a valuable painting from his uncle, a famous painter. The painter created the painting. After the taxpayer held the painting for two years, he sold it for a $400,000 gain. The gain is a long-term capital gain.

Question

Quizplus · Accepted Answer

The painting is considered a collectible, and gains from the sale of collectibles are subject to a maximum tax rate of 28%, not the standard long-term capital gains rate.

An Individual Taxpayer Received a Valuable Painting from His Uncle