Net Capital Gains Plunged 90% During Financial Crisis: IRS

Capital gains fell while losses more than doubled from 2007 to 2009, according to the IRS’ latest Statistics of Income Bulletin.

The SOI Bulletin, which comes out quarterly, reported that from tax years 2007 to ’09, capital gains declined by 55.7%, to $491 billion from $1.1 trillion. During this same period, capital losses rose to $454 billion from $193 billion, an increase of 135.2%. In terms of capital gains less losses, net gains fell by more than 90%, from $914 billion in 2007 to $37 billion in 2009.

For tax year 2010, taxpayers filed some 4.3 million returns with adjusted gross income of $200,000 or more, and roughly the same number reported expanded income of $200,000 or more, according to the bulletin.

Expanded income is AGI plus tax-exempt interest, nontaxable Social Security benefits, foreign-earned income exclusion and items of “tax preference” for “alternative minimum tax” purposes, minus several kinds of expenses and miscellaneous itemized deductions not subject to the 2%-of-AGI floor.

These high-income returns represented about 3% of all returns filed for the 2010 tax year, up from 2.8% in 2009.