grumpy
Thinks s/he gets paid by the post
- Joined
- Jul 1, 2004
- Messages
- 1,321
I am considering the following strategy - please offer any critiques:
I have stocks with significant long term capital gains. If I sell them in 2010 the gains would be taxed at 15%. In 2011 that rate is due to rise to 20%.
I can permanently shield those gains from that 5% increase by doing the following:
On or near the last trading day of 2010 sell all positions with substantial long term gains. 30 days before the end of the trading year sell positions with long term losses that are approx. equal to the gains (to avoid wash sale rule). On or near the first trading day of 2011, buy back all positions.
This will result in zero tax in 2010 since losses will offset gains and will reset the basis on all positions, permanently shielding the gains from the 5% increase. That 5% increase would otherwise carry approx. a $1000 tax liability.
My shares are all held at Buy and Hold Investments, therefore there are zero transaction costs for the buys and sells.
Anybody see any downside to this strategy?
I have stocks with significant long term capital gains. If I sell them in 2010 the gains would be taxed at 15%. In 2011 that rate is due to rise to 20%.
I can permanently shield those gains from that 5% increase by doing the following:
On or near the last trading day of 2010 sell all positions with substantial long term gains. 30 days before the end of the trading year sell positions with long term losses that are approx. equal to the gains (to avoid wash sale rule). On or near the first trading day of 2011, buy back all positions.
This will result in zero tax in 2010 since losses will offset gains and will reset the basis on all positions, permanently shielding the gains from the 5% increase. That 5% increase would otherwise carry approx. a $1000 tax liability.
My shares are all held at Buy and Hold Investments, therefore there are zero transaction costs for the buys and sells.
Anybody see any downside to this strategy?