8% capital gain rate. Beginning in 2001, the 10% capital gain rate is lowered to 8% for qualified 5-year gain. See Capital Gain Tax Rates, later.

18% capital gain rate. Beginning in 2006, the 20% capital gain rate will be lowered to 18% for qualified 5-year gain. The holding period for the property sold must have begun after 2000.

Election to recognize gain on certain mutual fund shares held on January 1, 2001. To qualify future gains for the 18% rate, you can elect to treat certain assets you held on January 1, 2001, as having been sold and then repurchased. The assets eligible for this treatment include shares issued by an open-end mutual fund.

You must pay tax for 2001 on any gains resulting from this election. For more information, see Capital Gain Tax Rates, later.

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