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A tremendous planning opportunity?
Old 01-24-2007, 02:35 PM   #1
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A tremendous planning opportunity?

I have only had some initial discussions with a tax expert on this, but I think this would work and might be a way for some individuals to retire earlier or generate more income. I'll float it out there for comment.

As The Wall Street Journal pointed out again last week, next year will bring a lowering of long-term capital gains to 0% for those in the lowest tax brackets. (See section three if of interest http://www.house.gov/jct/x-54-03.pdf http://www.house.gov/jct/x-54-03.pdf It seems to me that individuals with large appreciation of stock could sell without paying taxes using the following approach..I think there should be some readers who have appreciated company stock in the 401ks who could take advantage of Net Unrealized Appreciation (NUA) rules to eliminate this long-term apprecation.

The idea is to drive your tax bracket down to the lowest bracket in 2008 by taking only SS income (if you are already receiving SS or going to receive it) and Roth distributions for your income in 2008...You would give up potential tax-free growth on the Roth assets but for some this may be more than countered by taking tax-free stock apprecation..I would welcome any thoughts from those who are tax-wise.
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Re: A tremendous planning opportunity?
Old 01-24-2007, 02:47 PM   #2
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Re: A tremendous planning opportunity?

New_Thinking:

I have thought of your idea also.

However if you take moderately big or bigger capital gains then you are subject to the AMT tax. Therefore the amount of tax-free income that you could get is limited
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Re: A tremendous planning opportunity?
Old 01-24-2007, 02:51 PM   #3
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Re: A tremendous planning opportunity?

MB - I don't think the AMT applies..Look at the link under Seciton IIIA. Says applies to the AMT too....This was confirmed by my colleague who is very good with taxes.
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Re: A tremendous planning opportunity?
Old 01-24-2007, 02:54 PM   #4
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Re: A tremendous planning opportunity?

This cage has been rattled before. Only the first ~63k (or something like that) of capital gains would have the zero percent applicable to them. Gains above that would be subject to the 15% (or higher) rates.

Martha covered this a couple of times.
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Re: A tremendous planning opportunity?
Old 01-24-2007, 11:46 PM   #5
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Re: A tremendous planning opportunity?

I suspect, with the changing political winds, we may look back upon these days with fondness re: the tax treatment of cap gains ...
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Re: A tremendous planning opportunity?
Old 01-25-2007, 03:31 AM   #6
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Re: A tremendous planning opportunity?

i have come to the conclusion that the politicizations are in it for themselves. especially the new dems in congress... it is pathetic and sad.

the country needs leadership from the USA , and the world is in termoil. the dems are like sharks.
instead of standing behind the pres and showing strength, they are like sharks taking bites from a beaten whale.

we must stand up against islamo bullcrap NOW.... or we all will have to deal with it later. And all of our taxes , portfolios and families will be affected!

can we stop the friggin bickering , stand behind our leader and defeat this evil challenge? this is the question....
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Re: A tremendous planning opportunity?
Old 01-25-2007, 04:14 AM   #7
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Re: A tremendous planning opportunity?

Quote:
Originally Posted by Charles
I suspect, with the changing political winds, we may look back upon these days with fondness re: the tax treatment of cap gains ...
Rush Limbaugh predicted the other day that we will
"never see taxes this low again!" A pretty bold broad
statement. I wouldn't bet against him though.

JG
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Re: A tremendous planning opportunity?
Old 01-25-2007, 05:27 AM   #8
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Re: A tremendous planning opportunity?

Yeah.. that's really going out on a limb..
"we'll never see taxes going as low as ZERO again.."!
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Re: A tremendous planning opportunity?
Old 01-25-2007, 06:12 AM   #9
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Re: A tremendous planning opportunity?

it is not the taxes i am most worried about , it is the idiot Democrats wanting to "bargain" with the enemy and not destroy them!

the one thing i dont mind spending my tax dollar on is defense....

how bout a little covert operation to take out these crazy leaders of::
siria ,Iran, north korea etc.


wouldnt that be easier than all our war?
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Re: A tremendous planning opportunity?
Old 01-25-2007, 06:14 AM   #10
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Re: A tremendous planning opportunity?

cause they are coming for us!!!!!!!!! and sooner (rather than later) they will be here
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Re: A tremendous planning opportunity?
Old 01-25-2007, 10:50 AM   #11
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Re: A tremendous planning opportunity?

Here is a thread where we talked about the 0% rate for the years 2008-2010.


http://early-retirement.org/forums/i...3872#msg213872

If the capital gains put you into the 25% bracket, then those excess gains will be taxed at the 15% higher rate rather than the 0% rate. So, unless you limit your capital gain income and other income so you stay below the 25% bracket, any gains that put you outside that bracket will be taxed at 15%.

Currently the rates on long-term capital gains is 15% for taxpayers in the 25% bracket or higher and is 5% for individuals in the 10% and 15% tax brackets. In 2008 through 2010, the 15% rate remains the same but the 5% rate drops to 0%. After 2010, the capital gain rates will return to the old 20% and 10% rates, and the five-year holding period rules and rates return.



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Re: A tremendous planning opportunity?
Old 01-25-2007, 03:04 PM   #12
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Re: A tremendous planning opportunity?

Martha - Thanks for the link as I did miss this..Still seems that someone (married in this example) with proper planning could have taken $80k+ in appreciated ER stock in 2007 and 2008 to total $160k or so (since standard deductions and exemptions and paid either 5% or 10%..Then could live off say $40k for four years with SS and still due Roth conversions up to the 15% limit for those years..From that point, the Roth income could be coupled with SS and no tax would be paid..In the meantime, you keep converting down your IRA rollover to the 15% limit each year..therefore you keep your IRA taxes down and SS taxes at zero.

But I might be missing something....
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