If you sell or exchange a capital asset for more than your adjusted basis in the asset, the result is a capital gain. The Jobs and Growth Tax Relief Reconciliation Act of 2003 reduced the maximum tax rate on most long-term capital gains (those held for longer than 12 months) and eliminated the "super" long-term capital gains rates on the sale of assets held longer than five years. The reduced rates apply to sales and exchanges made on or after May 6, 2003 and before January 1, 2009.

• The 20 percent individual rate on long-term capital gains was reduced to 15 percent for individuals in a marginal income tax bracket greater than 15 percent
• The 10 percent individual rate on long-term capital gains was reduced to 5 percent for individuals in the 10 or 15 percent marginal income tax bracket (the 5 percent rate will become 0 percent in 2008)

The reduced capital gains rates apply for both regular income tax and alternative minimum tax (AMT) purposes.

For information on how you might be affected by the reduction in capital gains rates, consult a tax professional.