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Estimating future cap gains
Old 10-06-2013, 11:58 AM   #1
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Estimating future cap gains

I've been accumulating for some time now but am quite naive on distributing, is there any easy way to estimate what the capital gains would be if you took x amount from a fund?

For example if I've been tossing money every month into VTIAX for a few years and thru next year and wish to estimate how much of a capital gains hit I'd take when I retired and started drawing from it in 2015. I've poked around on the Vanguard site a bit but found nothing I could make use of.

Reason is for healthcare subsidies estimates, I know we'll be selling from our taxable accounts for income (along with 457 up to the std deduction + exemptions, and dividends from taxable accounts) and I've got a reasonable guess of how much we'd need to sell but just no sure how that is going to make our income look in the eyes of the IRS.


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Old 10-06-2013, 12:44 PM   #2
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Vanguard tells you the unrealized gain in each investment. Click on the "cost basis" tab just above the fund in your account. The % unrealized gain will be applied to each sale you make. Also, once you have sold it will tell you exactly how much YTD taxable gains you have incurred.

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Old 10-06-2013, 08:06 PM   #3
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Ok I see it, thanks Michael B.

So if I have say 300k and it shows 40k long term and 6k short term, then sell 20k would that all come from LT cap gains and be a simple function of 20 * 40/300?

Sorry if these seem like stupid questions, until now I've given zero thought to the ways and means of pulling money out.
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Old 10-06-2013, 09:17 PM   #4
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No, it's more complicated than that. It depends on whether you use avg cost, FIFO, or selected shares. Also, the rules changed for the holding companies where starting with 1/1/12 (or was it 1/1/13?) they must track basis for you, and you select which of the three methods you want to use for selling shares purchased after that date.

For older shares, they don't have to track basis, but Vanguard will provide you with the average cost method. You can use a different method but you'd have to figure it out for yourself, and you wouldn't be able to use VG's average cost reporting after that.

I've started typing in more details a couple of times but with that change of basis reporting methods and how sales are split between shares falling under the old and new rules, and the three different options, it's just too complicated to try to explain and I'd probably get it wrong. Do some work on your own via google and/or information you can probably get from Vanguard's site. Check, they often have well-written explanations for things like this. If you still have specific questions after that come back and ask. Or maybe someone else wants to tackle the topic, but not me.

You can also probably model sales by going through the sale process and then canceling it and see how much VG tells you about the cost basis. Also, once you actually sell, VG will tell you what the realized gains and losses are.
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Old 10-06-2013, 09:21 PM   #5
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Talk with Vanguard. It is likely that you can elect specific identification and then select the purchase lots that are sold and manage you gain.
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Old 10-07-2013, 06:25 AM   #6
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Would be sweet if they had some sort of "what if" tool eh.

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