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Special Notice on Capital Gains, Dividends and Interest Income Tax

 This TSSN is obsoleted by AN 94(2)

This supplemental estimate is being sent to you because of recently enacted changes in tax law subsequent to the mailing of Form 394ESA. If these change do not affect your filing status or change your estimate of tax due, please do not file this tax form.

The 60% Long Term Capital Gains Exclusion applies only to gains recognized on or before February 8, 1989. It does not apply to gains recognized after February 8, 1989; 100% of these gains will be taxable. The tax rate remains at 7%. Capital Gains tax liability, however, is limited to 5% of your Federal Adjusted Gross Income.

Effective January 1, 1989, the tax brackets and tax rates for the Dividends and Interest Income tax have changed. These new rates are indicated on the enclosed Supplemental Estimated Capital Gains, Dividends and Interest Income Tax Return, Form 394ESA, revised 6/89.

Your estimated tax should be recalculated based on these changes. If an additional tax is due, you must file the enclosed Form 394ESA, revised 6/89 by July 15, 1989.

The February 15 estimate requirement has been repealed. If it is determined that your 1989 Capital Gains tax liability will exceed $4000, a Form 394ESB must be filed by December 15, 1989 (15th day of the 12th month of the income year).

(NEW 6/89)