Taking profits

[ripper1]

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.

 

[jebmke]

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.

 

[scrabbler1]

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.

 

[steelyman]

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.

 

[Nords]

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.

 

[73ss454]

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.

 

[FinanceGeek]

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.

 

[Animorph]

I still have a loss carryover, so no rush for me.

 

[easysurfer]

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.

 

[Fermion]

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.

 

[steelyman]

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?

 

[Fermion]

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

 

[MichaelB]

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.

 

[HFWR]

I've been contemplating some re-jiggering of the allocation, but not for tax purposes, since most is in tax-deferred.

 

[RE2Boys]

Took some 0% cap gain profit of a stock I've held since early 1990s but looking to reinvest back into market.

 

[winger]

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.

 

[grasshopper]

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.

 

[Nords]

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.

 

[photoguy]

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?

 

[BOBOT]

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.

 

[sanfanciscotreat]

Talked with my tax man a couple of weeks ago.
I can take $100K in capital gains and pay $4500 federal tax since I have so little earned income and the income will be put into the IRA. Reinvesting in moderately high yielding equities for more consistent income.

 

[Nords]

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?

We topped off the cash stash late in 2007 (by selling out of a bunch of individual stocks) to about 8% and managed to make it last for two years.

Our ER portfolio is three ETFs and one stock: ~23% each of Berkshire Hathaway, an international ETF (EFV), a Dow dividend ETF (DVY), and a small-cap value ETF (IJS). We try to let each one oscillate +/- five percentage points around that level, but we've been gradually selling off the IJS.

When you say "selling at a loss", we've held some of our Berkshire Hathaway shares since 2001 with a split-adjusted cost basis of about $42/share. We'd held some of the others since 2003, so we were sitting on a ton of unrealized cap gains. We managed to wipe out the cap gains for DVY, IJS, and EFV through tax-loss swap selling during 2008-09. But otherwise we wouldn't have been selling anything at a loss.

 

[pb4uski]

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.

Actually, we got some new information recently that make this less of a concern.

While the 2014 subsidies will be provisionally based on 2012 tax return information (which is the most current tax return information available when the subsidies begin on 1/1/2014), when you file your 2014 tax return (in early 2015) you will calculate the subsidy that you were entitled to based on your actual 2014 income and then compare that amount to the subsidies that you actually received in 2014 and pay or receive the difference to/from the IRS.

Also see pages 2 and 3 of http://www.early-retirement.org/forums/f28/health-insurance-subsidy-calculator-63122-3.html

 

[photoguy]

When you say "selling at a loss", we've held some of our Berkshire Hathaway shares since 2001 with a split-adjusted cost basis of about $42/share. We'd held some of the others since 2003, so we were sitting on a ton of unrealized cap gains. We managed to wipe out the cap gains for DVY, IJS, and EFV through tax-loss swap selling during 2008-09. But otherwise we wouldn't have been selling anything at a loss.

Thanks for your response. By "selling at a loss" I just meant selling your equities during a market crash in order to meet cash spending needs (not tax loss harvesting). It sounds like you rode out the recession without ill effects.

 

[bondi688]

Not knowing when to take profits had been, and still is, my problem. I was thinking about putting stop loss orders on my holdings, but worry that I'll be stopped out from normal market movements, especially when I am holding the stocks for dividend income. But I have looked with dismay at a few of my stocks that peaked and then took a dive.