For Long Term gain, the maximum federal tax is 15% (or possibly 5%). For Short Term gain, the maximum federal tax is 35%. The key is the time of the holding period. If you have owned the asset for one year and then sell it, it is a "Long Term" gain. If you sell the asset one day before the year is up, it is a "Short Term" gain. There are special rules that create the holding period. If you inherit property, it will always be "Long Term" capital gains and the basis is the value of that property on the date of the deceased's death. If someone gives you a piece of property, your holding period includes the donor's holding period, which could in itself be over one year, automatically making it "Long Term" gain. Your basis is the donor's basis. If you receive property in a divorce, the holding period of your spouse (ex-spouse) would be added to your holding period. When you do a 1031 Gain Deferral by exchanging for another like-kind property, the holding period of the new property includes the holding period of the old property.