Today’s exciting topic is…..drum roll….capital gains!
Ok, I admit it. I know very little about capital gains, but it is a question that has come up recently in WTR counseling, particularly among older antiwar activists. Many have had a low income and been glad to avoid paying for war. Suddenly a gift or inheritance drops in their laps, which may bring economic relief but also potential taxes and new challenges to the conscience. Others are downsizing and selling a home they’ve owned for years and wondering what to do about potential capital gains if the sale price is well above their purchase price.
First, this is probably an issue to bring to an accountant or estate planner, because there are so many variables among individual finances that can influence whether and how the gains are taxed (both by the feds and your state). There are long-term capital gains— those held for more than one year — whose tax rates are different than on short-term holdings. Long-term capital gain tax rates begin at 0% for a single person with an income of $48,350 and below. For those married filing jointly the threshold is $96,700 and below. Short-term gains do not have a 0% tax rate; a quick web search on capital gains will produce the full tax rate breakdown.
If you are selling a house, a chunk of the sale price is deducted pre-tax, but there are all kinds of rules related to that too, like it has to be your primary residence for at least two recent years. If you’ve just inherited the property, that could influence what you decide to do. Capital gains are calculated on the sale price against the Fair Market Value on the death date of the previous owner.
For long time war tax resisters who may have had taxable income but kept it low and not owned property, inheritance can throw us for a loop. It’s usually not an issue of an inheritance being taken before it gets to you, it’s what to do about potential taxes you may incur and also how to protect it from seizure against any previous debt once you have it. We’ve collected stories about this over the years, which may provide helpful ideas should you find yourself in this situation, for example:
…Twice I’ve inherited a sum over $100,000. Divestment from the stock market created high capital gains taxes, and I couldn’t leave money in conventional investments or the IRS could have collected easily. But there’s a lot to be said for sudden wealth. In my case, being “rich” has made it, paradoxically, very easy not to pay for war. I can reduce my wages below the exempt amount on a wage levy. And my investments don’t need to be liquid or high-yield. For example, I’ve made zero-interest loans to community loan funds that help create affordable housing. This way, no information goes to the IRS.
Recently I’ve set up a “gift annuity” retirement plan with a large, socially responsible organization that supports my war tax resistance. This is a terrific, little-known way to keep large sums safe from collection. The organization will accrue the money, giving neither me nor (we hope) the IRS any access to it, till I reach a certain age; then they’ll pay me an annuity till I die; anything left over is theirs to keep. I even get to claim a large charitable-gift tax deduction right away! [Original post]
As to the “gift annuity” account, one warning is that the payments to you, either all or partially, are subject to federal and possibly state taxes. They are also assets seize-able by the IRS; a lien can be issued on the account and your annuity payment taken from the source. It is also possible for the IRS to locate investments in community loan funds. These sorts of seizures could be a lower priority or harder to find for the IRS, but it is important to be aware of the possibility.
Street theatre at Wall Street with Extinction Rebellion NYC, Tax Day 2022. Photo by Ed Hedemann.
As this was being written another WTR shared her story of inheriting a traditional IRA in a firm with questionable investments. She found that she could not roll it into her own Roth IRA with more ethical investments, so after some research discovered QCD, Qualified Charitable Distribution. Because she had just exceeded the 70-and-one-half year threshold age, she could make direct contributions to 501-C-3 organizations from the inherited IRA, avoiding any tax issues and satisfying her conscience. A few other short stories about coming into a windfall of any size are in the “inheritance” section of NWTRCC’s Practical Series #7, “Health Care and Income Security for War Tax Resisters”.
As of 2025, there are no estate taxes on a cash-type inheritance up to $13.99 million per individual and twice that for a couple. If the inheritance comes as stocks, bonds and property then you get into the tangle of capital gains. For anyone facing a suddenly large tax bill you might take courage from Larry Bassett’s story of receiving a large inheritance and refusing to pay more than $128,000 taxes due on it. He redirected the money to all good things, risking a severe response from the IRS. His updated story might surprise you.
Well, that was more than I thought I had to say about capital gains and related issues! As noted above, there is a lot of information on the web about this, but always be careful about what’s written by AI and what is knowledgeable human advice. Remember, much of our war tax resistance counseling is based on real-life stories, so please tell us yours. Comment below or contact NWTRCC directly.
— Post by Ruth Benn
P.S. You can check on the holdings of investment funds here: Weapons Free Funds.