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Source: http://www.allbusiness.com/accounting-reporting/corporate-taxes-taxing-dividends/763487-1.html
Under the JGTRRA, capital gains and dividends recognized in 2008 will be tax free for taxpayers in the 5% bracket. Accordingly, any (1) installment gain, (2) S corporation E&P bailout or asset distribution or (3) Sec. 531 or 545 earnings recognized in 2008 should be Federal tax free for 5%-bracket clients. Thus, while tax advisers may plan to achieve these objectives now, they may wish to delay implementation for such clients. Of course, the law may change between now and then.
If the law continues as is, tax practitioners should plan for 5% bracket clients to sell appreciated capital assets in 2008; the gain recognized will produce no Federal tax. If a client believes the assets will continue to increase in value, he or she may sell and then repurchase them; the built-in gain will be tax free. The repurchase will establish a higher basis; when the asset is eventually disposed of, a smaller gain will be recognized and a lesser tax paid. (The Sec. 1091 wash-sale rule only applies to losses – not to gains.)
This process may be applied very easily to marketable securities. A client need only call his or her broker to establish an arm's-length sale and repurchase with a new (higher) basis. The technique is more difficult with real estate. If the "sale" and "repurchase" include a related party, the IRS may successfully argue form over substance; if successful, the client would be deemed not to have sold or repurchased the asset, with no basis increase. If the sale is not to a related part; there probably could not be a repurchase.
While no one knows what the future holds, tax advisers should help clients make plans today and consider the timing of implementation. Letting the client make a timing decision is always prudent.