Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
I sold everything
Old 11-21-2008, 12:34 PM   #1
Thinks s/he gets paid by the post
2B's Avatar
 
Join Date: Mar 2006
Location: Houston
Posts: 4,330
I sold everything

Well, not really. I sold my IWD and SPY that were in my taxable account. I immediately bought approximately the same dollar amount of VTI. I may or may not undo this in late December. My tax deferred accounts are untouched.

I am now the proud owner of 20 years of $3,000 deductions for Sch D capital losses. The preferred alternative is to pay for capital gains in my VTI as I sell it off in retirement. Either way I'm going to relive the joys of 2008 for a long time to come.

I still have my 300 shares of BAC. It used to have over a 300% profit but it's now down to 16% and the day's not over yet.
__________________

__________________
The object of life is not to be on the side of the majority, but to escape finding oneself in the ranks of the insane -- Marcus Aurelius
2B is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 11-21-2008, 12:45 PM   #2
Moderator Emeritus
CuppaJoe's Avatar
 
Join Date: Jun 2007
Location: At The Cafe
Posts: 6,866
I want a real tax cut! Allow a $10,000+ loss on Sch. D. It's time to take to the streets! Also may be time to cut off the caffeine today.
__________________

__________________
CuppaJoe is offline   Reply With Quote
Old 11-21-2008, 12:49 PM   #3
Full time employment: Posting here.
 
Join Date: Oct 2007
Location: New York
Posts: 898
Funny, I did that yesterday - sold my iShares ETFs and rebought the Vanguard equivalents. IWD, IWM, IWN, and IVV all gone now.


The silver lining of this downturn is it gives opportunities for portfolio cleanup.
__________________
Money's just something you need in case you don't die tomorrow.
Maurice is offline   Reply With Quote
Old 11-21-2008, 02:11 PM   #4
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Sep 2005
Location: Northern IL
Posts: 18,288
Just realize this will *increase* your taxes in future years. Your new holdings take on the lower cost basis, so therefore higher profits when sold. I would do this if I had higher-than-average gains to offset, but I don't

It may still be worth it, but since we can never know what future tax rates will be....

-ERD50
__________________
ERD50 is online now   Reply With Quote
Old 11-21-2008, 02:15 PM   #5
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Sep 2005
Location: Northern IL
Posts: 18,288
Quote:
Originally Posted by CuppaJoe View Post
I want a real tax cut! Allow a $10,000+ loss on Sch. D. It's time to take to the streets! Also may be time to cut off the caffeine today.
One thing that aggravates me more than our overly-complex tax code, is the fact that they seldom index this stuff to inflation.

What's the point of going to all this rigamarole (hey! spell checker says that *is* a word! I didn't know that!) and then not take the simple/logical step of adding an inflation adjustment to it?

Are they idiots? <<<< Rhetorical question alert!!!! <<<<

-ERD50
__________________
ERD50 is online now   Reply With Quote
Old 11-21-2008, 02:49 PM   #6
Thinks s/he gets paid by the post
lazygood4nothinbum's Avatar
 
Join Date: Feb 2006
Posts: 3,895
welcome to my world, only i've got about 66 years worth of cap loss write-offs. now if only i could carry that forward into my next life. the only comfort is that with what little i've left, that $3k/yr is gonna be sweet.
__________________
"off with their heads"~~dr. joseph-ignace guillotin

"life should begin with age and its privileges and accumulations, and end with youth and its capacity to splendidly enjoy such advantages."~~mark twain - letter to edward kimmitt 1901
lazygood4nothinbum is offline   Reply With Quote
Old 11-21-2008, 03:48 PM   #7
Thinks s/he gets paid by the post
2B's Avatar
 
Join Date: Mar 2006
Location: Houston
Posts: 4,330
I thing I hadn't counted on. Looking at my brokerage account screen is so much nicer with everything green. I hope it stays that way.

I thing VTI is better than sitting on IWD and SPY anyway. I might go back but I'll have a month to reflect on it. The disadvantage of VTI is a slightly lower dividend yield but it isn't as concentrated as the other two.

I just wish I could do something worthwhile in my rollover IRA. I am planning on moving a limited amount over to my Roth next year. To stay under $100K I'm putting a bunch into my SERP with the 401k there to make sure I'm eligable. I don't plan on making the move until late in 2009.

I'm too heavily concentrated in my IRA. Higher income tax rates will hit me hard even in retirement. If there is a VAT added to our taxes, it will hit the same either way.
__________________
The object of life is not to be on the side of the majority, but to escape finding oneself in the ranks of the insane -- Marcus Aurelius
2B is offline   Reply With Quote
Old 11-21-2008, 03:58 PM   #8
Thinks s/he gets paid by the post
DblDoc's Avatar
 
Join Date: Aug 2007
Posts: 1,224
Quote:
Originally Posted by 2B View Post
Well, not really. I sold my IWD and SPY that were in my taxable account. I immediately bought approximately the same dollar amount of VTI. I may or may not undo this in late December. My tax deferred accounts are untouched.

I am now the proud owner of 20 years of $3,000 deductions for Sch D capital losses. The preferred alternative is to pay for capital gains in my VTI as I sell it off in retirement. Either way I'm going to relive the joys of 2008 for a long time to come.

I still have my 300 shares of BAC. It used to have over a 300% profit but it's now down to 16% and the day's not over yet.
I did something similar with VEA + VWO into VEU yesterday.

DD
__________________
DblDoc is offline   Reply With Quote
Old 11-21-2008, 09:09 PM   #9
Moderator Emeritus
Nords's Avatar
 
Join Date: Dec 2002
Location: Oahu
Posts: 26,619
Quote:
Originally Posted by 2B View Post
I am now the proud owner of 20 years of $3,000 deductions for Sch D capital losses. The preferred alternative is to pay for capital gains in my VTI as I sell it off in retirement. Either way I'm going to relive the joys of 2008 for a long time to come.
Eh, it'll probably be all used up in just 10-12 years after all the righteous cap gains we'll be seeing next decade...
__________________
*
*

The book written on E-R.org, "The Military Guide to Financial Independence and Retirement", on sale now! For more info see "About Me" in my profile.
I don't spend much time here anymore, so please send me a PM. Thanks.
Nords is offline   Reply With Quote
Old 11-21-2008, 09:28 PM   #10
Thinks s/he gets paid by the post
JPatrick's Avatar
 
Join Date: Jun 2005
Posts: 2,494
While you created a loss for sure, it sounds as if you may still have taxes to pay on your new acquisition this year. In other words, if your new fund isn't past it's ex date, you may have bought yourself a brand new 2008 taxable distribution.
What am I missing?
__________________
JPatrick is offline   Reply With Quote
Old 11-22-2008, 07:14 AM   #11
Thinks s/he gets paid by the post
2B's Avatar
 
Join Date: Mar 2006
Location: Houston
Posts: 4,330
Quote:
Originally Posted by JPatrick View Post
While you created a loss for sure, it sounds as if you may still have taxes to pay on your new acquisition this year. In other words, if your new fund isn't past it's ex date, you may have bought yourself a brand new 2008 taxable distribution.
What am I missing?
You're not missing anything except that "size matters." VTI is an index fund that has also had the crap kicked out of it this year. I suspect any capital gains dividends will be very small. Since I got rid of SPY and IWD, I'm sure I didn't move into a high tax situation resulting from any distributions.

The goal is to get a couple of years of $3000 deductions which lowers my taxes by $750 every year. The only cost was the approx $20 in transaction costs. Assuming the market ever comes back, I'll still have losses to offset any gains I get for a long time.
__________________
The object of life is not to be on the side of the majority, but to escape finding oneself in the ranks of the insane -- Marcus Aurelius
2B is offline   Reply With Quote
Old 11-22-2008, 07:54 AM   #12
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Jun 2005
Posts: 8,625
Quote:
Originally Posted by JPatrick View Post
While you created a loss for sure, it sounds as if you may still have taxes to pay on your new acquisition this year. In other words, if your new fund isn't past it's ex date, you may have bought yourself a brand new 2008 taxable distribution.
What am I missing?
You are missing that all these ETFs pay about a 2% or so dividend. You were gonna pay taxes on a distribution whether you exchanged into other ETFs or not. The ETFs are not giving out cap gains distributions.

As for the future, with all the carryover capital losses, we won't be paying any taxes in our early retirement as we sell equities to fund our expenses.
__________________
LOL! is offline   Reply With Quote
Old 11-22-2008, 10:55 AM   #13
Recycles dryer sheets
 
Join Date: Sep 2007
Posts: 428
The deduction of $3,000 becomes less and less valuable each year in the future (assuming inflation - not deflation).

Also, I booked some gain in 2000, paid taxes on all gains at year end, then lost my butt in 2001-2003 but could only deduct $3,000/yr going forward, can't go back and offset those gains that I paid taxed on the previous year? Somebody said that for businesses, you can go back two years.

For those in the -$1,000,000 club, it would take more than 30 years to deduct the losses, hopefully we will have some gains along the way to offset some of the losses.

Life is not fair.

mP
__________________
Disappointed is offline   Reply With Quote
Old 11-22-2008, 11:26 AM   #14
Thinks s/he gets paid by the post
 
Join Date: Aug 2006
Posts: 1,361
I'm newly married. Does the $3000 capital loss limit get doubled for married couples, or is it still just 3k?
__________________
Hamlet is offline   Reply With Quote
Old 11-22-2008, 11:31 AM   #15
Moderator
ziggy29's Avatar
 
Join Date: Oct 2005
Location: Texas
Posts: 15,612
Quote:
Originally Posted by Hamlet View Post
I'm newly married. Does the $3000 capital loss limit get doubled for married couples, or is it still just 3k?
Still $3,000. Filing status has no bearing on this particular tax law (except that the limit for married filing separate is half of this -- $1500).
__________________
"Hey, for every ten dollars, that's another hour that I have to be in the work place. That's an hour of my life. And my life is a very finite thing. I have only 'x' number of hours left before I'm dead. So how do I want to use these hours of my life? Do I want to use them just spending it on more crap and more stuff, or do I want to start getting a handle on it and using my life more intelligently?" -- Joe Dominguez (1938 - 1997)

RIP to Reemy, my avatar dog (2003 - 9/16/2017)
ziggy29 is offline   Reply With Quote
Old 11-22-2008, 01:21 PM   #16
Thinks s/he gets paid by the post
lazygood4nothinbum's Avatar
 
Join Date: Feb 2006
Posts: 3,895
Quote:
Originally Posted by Disappointed View Post
The deduction of $3,000 becomes less and less valuable each year in the future (assuming inflation - not deflation). ...hopefully we will have some gains along the way to offset some of the losses.
my assumption (perhaps wrong) is that the deduction will be adjusted over my lifetime in accordance with inflation. (i can hope, can't i, since i've a lifetime worth of losses.)

losses carried forward can offset other income even in years without long or even short term cap gains.

http://www.irs.gov/newsroom/article/...103509,00.html

Quote:
Generally, realized capital losses are first offset against realized capital gains. Any excess losses can be deducted against ordinary income up to $3,000 ($1,500 if married filing separately) on line 13 of Form 1040.
__________________
"off with their heads"~~dr. joseph-ignace guillotin

"life should begin with age and its privileges and accumulations, and end with youth and its capacity to splendidly enjoy such advantages."~~mark twain - letter to edward kimmitt 1901
lazygood4nothinbum is offline   Reply With Quote
Old 11-22-2008, 06:18 PM   #17
Recycles dryer sheets
 
Join Date: Jul 2008
Location: Joaquin, Texas
Posts: 164
I don't understand the point of doing this..If tax rates go up in the future as I believe they will it seems to me like I'm better off to wait for all my losers to come back than to sell now, buy more stocks and then sell later. Also, if I sell now I have additional comissions..I can see some short term advantage or an advantage for one who will be in lower tax bracket in the future or in case the market doesn't come back in my lifetime but beyond that it just doesn't make sense to me..Am I missing something?
__________________
Life is good. Then you die.
lawman is offline   Reply With Quote
Old 11-22-2008, 07:08 PM   #18
Thinks s/he gets paid by the post
 
Join Date: Nov 2005
Location: North of Montana
Posts: 2,753
For the Canadians here it is a good strategy. CL's are deductible immediately and carried forward at current value.
__________________
There are two kinds of people in the world: those who can extrapolate conclusions from insufficient data and ..
kumquat is offline   Reply With Quote
Old 11-22-2008, 08:01 PM   #19
Thinks s/he gets paid by the post
Spanky's Avatar
 
Join Date: Dec 2004
Location: Minneapolis
Posts: 4,046
I am contemplating on consolidating 6 funds into one VT fund.
__________________
May we live in peace and harmony and be free from all human sufferings.
Spanky is offline   Reply With Quote
Old 11-23-2008, 12:45 AM   #20
Thinks s/he gets paid by the post
DblDoc's Avatar
 
Join Date: Aug 2007
Posts: 1,224
Quote:
Originally Posted by lawman View Post
I don't understand the point of doing this..If tax rates go up in the future as I believe they will it seems to me like I'm better off to wait for all my losers to come back than to sell now, buy more stocks and then sell later. Also, if I sell now I have additional comissions..I can see some short term advantage or an advantage for one who will be in lower tax bracket in the future or in case the market doesn't come back in my lifetime but beyond that it just doesn't make sense to me..Am I missing something?

This will hopefully clarify it: Tax Loss Harvesting - Bogleheads

DD
__________________

__________________
DblDoc is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
I just sold it all mickj Young Dreamers 75 04-26-2007 03:53 AM
Sold the Family Homestead 2B Health and Early Retirement 7 03-11-2007 03:13 PM
hotels built and sold and sold again renferme FIRE and Money 5 07-10-2006 09:19 AM
Finally sold my house MJ Life after FIRE 21 04-12-2006 01:43 PM
Sold the Company, Wahoo! TromboneAl Other topics 9 02-01-2006 05:49 PM

 

 
All times are GMT -6. The time now is 01:19 PM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.