An Act To Establish a Long-term Capital Gains Tax Rate
Maine Legislature, Session 122, LD 0734
Committee: Taxation
Sponsors: LINDELL, WESTON, BIERMAN, CROSTHWAITE, THOMAS
Amends: 36 MRSA §5, 36 MRSA §5122, 36 MRSA §5204-C

Legislative Document 
No. 734 
H.P.529 
House of Representati ves. February to, 1005 
An Act To Establish a Long-term Capital Gains Tax Rate 
Reference to the Committee on Taxation suggested and ordered printed. 
Presented by Representative LINDELL of Frankfort. 
Cosponsored by Senator WESTON of Waldo and 
/!~ 
frl.1lldC~ 
MILLICENT M. MacFARLAND 
Clerk 
Representatives: BIERMAN of Sorrento, CROSTHWAITE of Ellsworth, THOMAS of Ripley. 
1'11.IIIl ...... lIn R"l:ydnl Pap.:'T 
Be it enacted by the People of the State of Maine as follows: 
Sec. 1. 36 MRSA §5I22, sub-§2, ~Q, as corrected by RR 2003, c. 
1, §38, is amended to read: 
Q. 
A fraction of any amount previously added back by the 
taxpayer 
to 
federal 
adjusted 
gross 
income 
pursuant 
to 
subsection 1, paragraph N. 
(1) 
With respect to property first placed in service 
during taxable years beginning in 2002, the adjustment 
under this paragraph is available for each year during 
the 
recovery 
period, 
beginning 
years 
after 
the 
beginning of the taxable year during which the property 
was first placed in service. 
The fraction is equal to 
the amount added back under subsection 1, paragraph N 
with respect to the property, divided by the number of 
years in the recovery period minus 2. 
(2) 
With 
respect 
to all other 
property, 
for 
the 
taxable year 
immediately following the taxable year 
during which the property was first placed in service, 
the fraction allowed by this paragraph is equal to 5 q" 
of the amount added back under subsection 1, paragraph 
N with respect to the property. 
For each subsequent 
taxable year during the recovery period, the fraction 
is 
equal 
to 
95% 
of 
the 
amount 
added 
back 
under 
subsection 1, paragraph N with respect to the property, 
divided by the number of years in the recovery period 
minus 2. 
In the case of property expensed pursuant to Section 179 of 
the Code, 
the term "recovery period" means 
the recovery 
period that would have been applicable to the property had 
Section 179 not been applied; aRe 
Sec. 2. 36 MRS A §5I22, sub-§2, ~T, as amended by PL 2003, c. 
705, §12 and affected by §14, is further amended to read: 
T. 
For income tax years beginning on or after January 1, 
2002 and before January 1, 
2004, 
an amount equal to the 
total premiums spent for long-term care insurance policies 
certified under Title 24-A, section 5075-A as long as the 
amount subtracted is reduced by the long-term care premiums 
claimed as an itemized deduction pursuant to section 5125. 
For income tax years beginning on or after January 1, 2004, 
an amount equal to the total premiums spent for qualified 
long-term care insurance contracts certified under Title 
24-A, section 5075-A, as long as the amount subtracted is 
Page l-LR0360 (1) 
reduced by any amount claimed as a deduction for federal 
income tax purposes in accordance with the Code, 
Section 
162(1) 
and by the long-term care premiums claimed as an 
itemized deduction pursuant to section 5125T; and 
Sec. 3. 36 MRSA §5122. sub-§2. ~U is enacted to read: 
U. 
For income tax years beginning on or after January 1, 
2005, an amount equal to income derived in that tax year for 
a capital gain derived from the sale of an asset held for 
more than one year by the taxpayer. 
Sec. 4. 36 MRSA §5204-C is enacted to read: 
§5204-C. 
Capital gains 
In addition to any other tax imposed by this Part, the tax 
owed on income derived from capital gains derived from the sale 
of an asset held by a taxpayer for more than one year is 3%. 
SUMMARY 
Currently under state law, long-term capital gains are taxed 
as regular income. 
This bill taxes income derived from the sale 
of assets held for more than one year at 3%.