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Taking profits
Old 09-29-2012, 10:00 AM   #1
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Taking profits

Anybody out there taking off the table. Especially those of us that are in the 15% bracket and will be taxed at 0 for long term gains.
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Old 09-29-2012, 10:14 AM   #2
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No, for two reasons. First, I haven't hit a rebalance trigger. Second, I harvested tax losses during 2008-09 - it will be a very long time before I need to (be able to) report a gain on my 1040.

Usually if I leave money on the table my spouse grabs it.
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Old 09-29-2012, 10:33 AM   #3
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I took some bond fund profits off the table last month but for a special, unrelated reason. It got taxed at 0% federal but I will have to pay some much smaller state income taxes on the gain.
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Old 09-29-2012, 10:43 AM   #4
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I am taking advantage of this for 2012. I quit working in 2011, and will have had very little income from wages/pension for most of 2012, which leaves a relatively big buffer till I hit the top of the 15% bracket for this year. I can't say I specifically planned this, but realized it was a possibility.

I already sold one of my larger stock holdings back around March (and bought it back shortly thereafter for a slightly lower price), and the gains from that sale should be tax-free. The new shares have a higher basis now than those I bought in 2006 and sold in March, but the quantity is still the same.

I also put together a little spreadsheet to help me see how much of the 15% bracket I have "filled up", and will see where things are around Thanksgiving and do more selling (and buyback) to get the 0% rate.

I don't have any carryover losses, but I do have unrealized losses that I will just let sit in 2012 and use them to offset future gains.
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Old 09-29-2012, 07:29 PM   #5
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Anybody out there taking off the table. Especially those of us that are in the 15% bracket and will be taxed at 0 for long term gains.
Yep. Spouse and I have learned that if we have the table discussion more than once a month, then it's probably time to sell something.

Except Berkshire Hathaway. I'm not ready to sell that yet.
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Old 09-29-2012, 07:50 PM   #6
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Only thing I've been taking off the table are some 6 and 6 1/4% CD's that have been expiring. Problem is what to do with them now. I guess wait till January, rebalance and go forward. Taking things off the table confuses me as I wouldn't know what to do with the money, but I am a little slow.
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Old 09-29-2012, 09:04 PM   #7
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Another factor you may want to consider is that your MAGI for 2012 will determine your eligibility for the ACA health insurance subsidy in 2014.
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Old 09-29-2012, 10:48 PM   #8
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I still have a loss carryover, so no rush for me.
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Old 10-01-2012, 09:48 AM   #9
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No profit taking for me. I rebalance only once a year. But because I new quarter started, I did take a peek at my AA and the actual vs target allocations haven't moved too much so I'm staying put.
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Old 10-01-2012, 09:55 AM   #10
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I could see selling for a gain if you are taxed at 0% and then immediately rebuying a "substantially different" investment that was really the same. For example, selling SPY and buying VTI. This would be free money, since your cost basis would now be much higher in VTI for the future when you sold stock in a non 0% bracket.
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Old 10-01-2012, 10:03 AM   #11
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I could see selling for a gain if you are taxed at 0% and then immediately rebuying a "substantially different" investment that was really the same. For example, selling SPY and buying VTI. This would be free money, since your cost basis would now be much higher in VTI for the future when you sold stock in a non 0% bracket.
I don't think it's necessary to worry about "substantially different" if you are realizing a gain. That is, it would not be a wash sale. Have I got that right?
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Old 10-01-2012, 10:11 AM   #12
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I don't think it's necessary to worry about "substantially different" if you are realizing a gain. That is, it would not be a wash sale. Have I got that right?
Oh right. I am so used to trying to generate losses instead of gains because I am NOT in a 0% bracket
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Old 10-01-2012, 10:11 AM   #13
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I don't think it's necessary to worry about "substantially different" if you are realizing a gain. That is, it would not be a wash sale. Have I got that right?
Methinks yea.
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Old 10-01-2012, 10:15 AM   #14
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I've been contemplating some re-jiggering of the allocation, but not for tax purposes, since most is in tax-deferred.
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Old 10-01-2012, 12:15 PM   #15
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Took some 0% cap gain profit of a stock I've held since early 1990s but looking to reinvest back into market.
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Old 10-01-2012, 01:26 PM   #16
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We recently took profits. 2nd time in 2012. We are under 62, and have lived off our tax-deferred investments since 2005.

We have 4 tax deferred accounts, and their total we call our "Base". When the Base investments earn $25k, we move it to a MM that we take monthly withdrawals from. If the MM amount reaches 2 years of withdrawals, we don't move money to MM, instead we move the base up.

Works for us.
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Old 10-01-2012, 03:26 PM   #17
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I took some LTCG, bought the same ETF back. I look at it as resetting the bar on my basis, so instead of having to blow through 50K of gains if the market tanks, I can harvest the loss. I haven't had a loss since 2000. The only bummer is state taxes of 2.6%. I will have a little Fed tax from a Roth conversion.
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Old 10-01-2012, 09:22 PM   #18
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Just as a sort of "Wheee!" data point, we normally try to maintain our asset allocation at about 92% equities and 8% cash. That floats around a little as we consume the cash (two years' expenses) so it's not unusual to see us fluctuate between 4-12%.

As of today we're at about 13% cash. But not to worry, I'm sure the market will keep going up and our cash percentage will return to the 4-12% range any day now...

Spouse and I are still Wheee! talking about it, but we may be on the verge of adjusting our asset allocation goals. Her inflation-adjusted pension starts up in 2022 and she feels we no longer have any need to maintain an investment portfolio designed to beat inflation. I'm a little slower to reach this conclusion, but her opinion is the one that counts.
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Old 10-03-2012, 09:43 AM   #19
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Just as a sort of "Wheee!" data point, we normally try to maintain our asset allocation at about 92% equities and 8% cash. That floats around a little as we consume the cash (two years' expenses) so it's not unusual to see us fluctuate between 4-12%.
Nords -- this is an interesting approach. Was your two year cash bucket sufficient (along with dividends) to ride out 2008-present without selling at a loss? Are you focusing on a dividend portfolio, stocks with less volatility, or are you closer to TSM?
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Old 10-03-2012, 10:34 AM   #20
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Just as a sort of "Wheee!" data point, we normally try to maintain our asset allocation at about 92% equities and 8% cash.

Caramba! I've got an image of you as a big snarly dog just daring the bad guys to come into the yard.
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