We pay taxes on 50% of the net gain. Not 50% tax.

We pay taxes on 50% of the net gain. Not 50% tax. As I said, if I had a net gain of $20,000 I would pay tax on 50% of that amount. So I would be taxed on $10,000. The amount of tax I pay would depend on my total income and what bracket I end up in. It would probably be around 22% -- 26%. I would end up paying around $2200-$2300 on $20,000 worth of capital gain.

I probably just explained it wrong.

Personally, in this example I would put away 50%($5000) in case there are any nasty surprises at tax time. The extra money's not going anywhere. It's just being over-cautious. That's probably where the confusion was.