Why Choose Sunbelt?
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There are two kinds of capital gains; short-term and long-term (assets held longer than one year) Short-term capital gains are taxed at the ordinary income tax rate in effect for the year, ranging from 10-35%. Long-term capital gains are taxed at a special rate that depends on which income tax bracket you personally fall under. In some individual tax brackets, there are no taxes due on such gains. 

Another tax you need to be familiar with is, the Depreciation Recapture tax. All assets that you depreciate over the years are subject to the depreciation recapture tax. For example, you buy a machine for $1,000 and take $400 worth of depreciation deductions from your income over the course of 5 years. After 5 years, Uncle Sam recognizes the machine is worth $600. If you sell that machine for $700, then you have a gain of $100. Because you received depreciation deductions, you are required to include the $100 gain as part of your ordinary income from the sale, and are taxed accordingly. However, say you sell the machine for $1,200, because the original price you paid was $1,000, $400 of the gain is taxed at your income rate and $200 is taxed at the more favorable capital gains tax rate.

Confused yet?  When it comes to the sale of your business and taxes, there is one other thing you should be aware of.