US tax and interest on a $60,000 gain, held 15 years — that is 65% of the gain, of which $16,785 is interest rather than tax.
The three regimes
Same position, same gain, three different sets of rules. The default applies when neither election is in place — which is the usual situation, because both elections generally had to be made for the first year the position was held.
Gain spread back across every year held. Each prior year taxed at that year's top ordinary rate, plus an interest charge running from that year's filing deadline.
Unrealised appreciation included each year as ordinary income. Requires the holding to be marketable stock, and no interest charge arises.
Fund earnings included annually as they arise; the disposition is then a capital gain. Requires an annual information statement from the fund.
What this screen cannot tell you
The working
Show the year-by-year allocation
Under the default regime the gain is allocated ratably across every day of the holding period. The slice falling in the year of disposition is ordinary income at your own marginal rate. Every earlier slice is taxed at the highest ordinary rate in force for that year — not your rate, and not today's rate — and carries interest as though the tax had been underpaid since that year's filing deadline.
| Year | Days | Share of gain | Rate | Tax | Interest | Total |
|---|---|---|---|---|---|---|
| 2011 | 364 | $3,738 | 35.0% | $1,308 | $2,301 | $3,609 |
| 2012 | 366 | $3,758 | 35.0% | $1,315 | $2,076 | $3,392 |
| 2013 | 365 | $3,748 | 39.6% | $1,484 | $2,093 | $3,577 |
| 2014 | 365 | $3,748 | 39.6% | $1,484 | $1,859 | $3,343 |
| 2015 | 365 | $3,748 | 39.6% | $1,484 | $1,640 | $3,124 |
| 2016 | 366 | $3,758 | 39.6% | $1,488 | $1,439 | $2,928 |
| 2017 | 365 | $3,748 | 39.6% | $1,484 | $1,244 | $2,729 |
| 2018 | 365 | $3,748 | 37.0% | $1,387 | $996 | $2,383 |
| 2019 | 365 | $3,748 | 37.0% | $1,387 | $840 | $2,227 |
| 2020 | 366 | $3,758 | 37.0% | $1,391 | $696 | $2,087 |
| 2021 | 365 | $3,748 | 37.0% | $1,387 | $558 | $1,945 |
| 2022 | 365 | $3,748 | 37.0% | $1,387 | $431 | $1,818 |
| 2023 | 365 | $3,748 | 37.0% | $1,387 | $312 | $1,699 |
| 2024 | 366 | $3,758 | 37.0% | $1,391 | $201 | $1,592 |
| 2025 | 365 | $3,748 | 37.0% | $1,387 | $97 | $1,484 |
| 2026 | 365 | $3,748 | 32.0% | $1,199 | — | $1,199 |
Assumptions and simplifications
The QEF and mark-to-market figures are what this position would have cost under those regimes, not options available today. Both are elections that generally had to be in place for the first year of the holding period, and both have eligibility conditions a non-US pooled fund may not meet at all.
Interest is compounded annually at a flat 7.0%. The statutory rate floats quarterly and compounds daily, so a real charge on a holding period this long comes out somewhat higher than the figure shown.
The holding period spans 3 different top ordinary rates (35.0%, 39.6%, 37.0%). Each year's slice is taxed at the rate in force for that year, not at today's rate.
Dates are modelled as whole calendar years — bought on 1 January of the purchase year, sold on 31 December of the disposition year. A real acquisition date shifts the first and last slices, not the shape of the result.
The rupee figures use at ₹95 / $, an assumption you set rather than a live rate.