For lower-tax bracket individuals, the long-term capital gains tax rate temporarily drops to 0% in 2008, 2009, and 2010 (in 2011, this rate reverts to 10%). This may be a signal for some investors to sell. Before you advise your clients, be sure you understand who qualifies and who doesn't.

The 0% tax rate applies only to individuals (not corporations) in the 10% and 15% tax brackets who have net capital gain and/or qualified dividend income. The income limit for these brackets in 2008 is $65,100 for joint filers, $43,650 for heads of household, and $32,550 for single filers and married persons filing separately.

Net capital gain generally is the excess of net long-term capital gains over net short-term capital losses, subject to certain netting rules. The 0% tax rate doesn't apply to collectibles gains or to gains on sales of certain small business stock, which are taxed at a maximum rate of 28%. It also does not apply to unrecaptured Section 1250 gains, which are taxed at a maximum rate of 25%.

Qualified dividends are dividends received during the tax year from domestic corporations and qualified foreign corporations. A qualified foreign corporation is an entity incorporated within a U.S. possession or one that is eligible for the benefits of a comprehensive income tax treaty with the U.S. that includes an exchange of information program (the current income tax treaty with Barbados is specified as not being sufficient). Dividends paid by a foreign corporation that is not a qualified foreign corporation are eligible for the new rates if the stock of the corporation on which the dividends are issued is traded on an established U.S. equities market.

One group of taxpayers who won't benefit from the 0% rate is children affected by the newly expanded kiddie tax rules. For 2008, dependent children under 19 and certain full-time students under 24 will be affected by the special rules that will apply their parent's higher tax rate to their investment income in excess of $1,800.