If you spend a lot of time trolling the Internet for stock tips, you may have gotten wind of a tax break that will supposedly allow investors to sell stocks and mutual funds next year without paying a dime to the IRS.

Like a lot of things you find online, this rumor contains a kernel of truth. From 2008 through 2010, the long-term capital gains rate for some investors will drop to zero. But before you start planning a fire sale of your stocks and mutual funds, make sure you're eligible for this tax break.

The zero-percent capital gains rate will be limited to individuals in the 10 percent and 15 percent tax brackets. Those folks now pay 5 percent on long-term capital gains.

Withdrawals from retirement savings plans, such as individual retirement accounts, won't be affected because those withdrawals are taxed at your ordinary income tax rate.

Even if you meet the income limits, only a portion of your gains might qualify for the zero-percent rate. That's because capital gains from the sale of stocks or mutual funds are added to your income; that additional income might push you into a higher tax bracket.

Suppose, for example, that you're a married couple, that the income cutoff for the 15 percent tax bracket in 2008 is $65,000 and that all your income comes from capital gains. If your 2008 taxable income is $55,000, none of your gains would be taxed, says John Roth, a tax analyst for CCH. But if you sell enough investments to generate $70,000 in long-term gains, $5,000 of those gains would be taxed at 15 percent.

The zero-percent capital gains rate was tucked into a tax bill that lowered gains rates across the board through 2010.

But lawmakers weren't happy to hear that parents were planning to exploit the zero-percent capital gains rate, says Ed Slott, an accountant and IRA expert in Rockville Centre, N.Y.

"Their (legislators') intent," he says, "was for retired people to pay a lower rate, not for rich people to shift money to younger kids."

So Congress broadened the "kiddie tax," which taxes a child's investment income at the parents' top marginal rate.

In the past, the tax covered children up to age 13, thereby providing a chance for parents to transfer assets to their teenage children.

But last year, Congress raised the "kiddie tax" threshold to children 17 and younger. And an Iraq war funding bill signed into law last month expands that to children up to 19 — or 24, if they're full-time students and dependent on their parents — starting in 2008.

So if most investors earn too much to take advantage of the tax break, who will benefit from the zero-percent capital gains rate? Some examples: