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Old 09-23-2012, 01:24 PM   #21
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I'm building a fiscal hang glider in my basement, so I'm not as worried about going off the fiscal cliff as I was.
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Fiscal Cliff - Long Term Capital Gains Rate
Old 09-23-2012, 01:51 PM   #22
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Fiscal Cliff - Long Term Capital Gains Rate

I don't know about the rest of you, but one aspect of the expiring (end of 2012) rates that has my attention is the long term capital gains rate. Under the current rate structure, it is 15%. As of January 1, 2013, it is scheduled to rise to 20%.

As a result, I have some serious thinking to do on certain securities that I have a low cost basis on, that I've either had for a long period of time and a bunch of stuff I bought in the early 2009 time frame. That is, do I:
  1. Sell after the election if Obama wins, assuming re-election means the rates will be rising.
  2. Sell now, assuming everyone and their brother will be doing 1.
  3. Wait it out.
I normally try not to use taxes as input into my buy/hold/sell analysis of securities I own, but the differences in taxes between the 15% and 20% is significant.
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Old 09-23-2012, 07:42 PM   #23
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Yah. Some 'cliff', huh?

Don't mind me. I'll be over at Capitol Hill. Look for the guy shouting "Jump... JUMP...."
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Old 09-23-2012, 07:49 PM   #24
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Originally Posted by copyright1997reloaded
I don't know about the rest of you, but one aspect of the expiring (end of 2012) rates that has my attention is the long term capital gains rate. Under the current rate structure, it is 15%. As of January 1, 2013, it is scheduled to rise to 20%.
Tax loss harvesting. It's a Good Thing. And a hike in the capital gains rate makes captured losses just that much more valuable.

I banked losses back in 2008/2009 that should cover Capitol gains spun off by the portfolio for... Well, as long as I need, anyway. I'd guess that in the ongoing secular bear market, we have pretty good odds of seeing a 20% or so dip one more time in the next several years. If you have the opportunity to capture some capital losses in your taxable portfolio, do it!
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Old 09-24-2012, 09:49 AM   #25
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Tax loss harvesting. It's a Good Thing. And a hike in the capital gains rate makes captured losses just that much more valuable.

I banked losses back in 2008/2009 that should cover Capitol gains spun off by the portfolio for... Well, as long as I need, anyway. I'd guess that in the ongoing secular bear market, we have pretty good odds of seeing a 20% or so dip one more time in the next several years. If you have the opportunity to capture some capital losses in your taxable portfolio, do it!
I too have a bunch of losses left over. So if it goes to 20% it has increased the value of those old losses..right?..

Bob
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Old 09-24-2012, 01:16 PM   #26
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I too have a bunch of losses left over. So if it goes to 20% it has increased the value of those old losses..right?..

Bob
Right. The strategy would be to delay LTL until higher rates, and take LTG now. However, very few of my positions are long term losses.
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Old 09-24-2012, 09:08 PM   #27
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US can't be compared to Greece.
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Old 09-25-2012, 03:34 AM   #28
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Why not ? Both are sovereign nations with heavy debts.
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US can't be compared to Greece.
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Old 09-25-2012, 06:29 AM   #29
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Why not ? Both are sovereign nations with heavy debts.
But only one of them has control over its money.,
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Old 09-25-2012, 08:17 AM   #30
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But only one of them has control over its money.,
Yes, that is a major difference between US and Greece or the Weimar Republic (Weimar Republic - Wikipedia, the free encyclopedia). However, this only works as long as other countries accept US currency in return for the goods and services they are exporting to us. Given that the biggest holder of US treasury debt is us in the forms of the Social Security Trust Fund, Medicare Trust Fund, and now over 1.6 Trillion in Federal Reserve instant money (aka "quantitative easing"), I wouldn't be to sure that we will be able to expand our money supply without consequences for ever.

The "good news" is that we aren't alone in the rush to the bottom. It seems to be a desire of many of the western nations. (For example, Japan just announced additional QE of their own.)

All of this is an attempt to stem the implosion that occurs when debt doesn't get repaid...the question everyone needs to ask themselves is will they be able to reverse the qe when the velocity of money starts going the other way, i.e. when consumer demand starts pushing prices higher.
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Old 09-25-2012, 10:15 AM   #31
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US also has a productive economy, Greece doesn't.

US isn't full of freeloaders like Greece, except those who don't want the marginal tax rates to return to their previous levels.

Etc.

Whenever there is trouble, everyone will rush into the dollar. For all the dilution of value in the dollar, is US Treasury having to pay high interest rates?

If US Treasury instruments had to pay rates comparable to what the PIIGS were paying for their bonds, there will probably be a lot of other problems than high debt. Something will seriously be wrong in the global economy.
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Old 09-25-2012, 10:27 AM   #32
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I would feel a lot more uneasy if the USA didn't have such vast reserves of coal, natural gas, shale oil, timber, copper, etc. If we really started to get into serious trouble with respect to the world's opinion of our currency, we could tap into those resources in a way almost unimaginable today. We really are sitting on top of a gold mine, so to speak.
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Old 09-25-2012, 11:05 AM   #33
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Originally Posted by copyright1997reloaded View Post
I don't know about the rest of you, but one aspect of the expiring (end of 2012) rates that has my attention is the long term capital gains rate. Under the current rate structure, it is 15%. As of January 1, 2013, it is scheduled to rise to 20%.

As a result, I have some serious thinking to do on certain securities that I have a low cost basis on, that I've either had for a long period of time and a bunch of stuff I bought in the early 2009 time frame. That is, do I:
  1. Sell after the election if Obama wins, assuming re-election means the rates will be rising.
  2. Sell now, assuming everyone and their brother will be doing 1.
  3. Wait it out.
I normally try not to use taxes as input into my buy/hold/sell analysis of securities I own, but the differences in taxes between the 15% and 20% is significant.
Present law also has the following tax for high earners. If your income is over $200k single (or $250k married) then there will be the additional (Obamacare) tax on investment income of 3.8%.

So your rate could go as high as 23.8%

Also, dividends lose their special status and will be taxed at your ordinary income rate. That could be as high as 43.4% versus the current 15% max.
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Old 09-25-2012, 11:57 AM   #34
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Originally Posted by Fermion View Post
I would feel a lot more uneasy if the USA didn't have such vast reserves of coal, natural gas, shale oil, timber, copper, etc. If we really started to get into serious trouble with respect to the world's opinion of our currency, we could tap into those resources in a way almost unimaginable today. We really are sitting on top of a gold mine, so to speak.
No doubt about the advantage we have for at least several decades ahead if not more WRT utility/power, most nations are at a disadvantage in terms of "natural resources." However, replacing crude oil (transportation mostly) would take some time and/or considerable disruption and expense, but at least it's technically doable.
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Old 09-25-2012, 12:23 PM   #35
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No doubt about the advantage we have for at least several decades ahead if not more WRT utility/power, most nations are at a disadvantage in terms of "natural resources." However, replacing crude oil (transportation mostly) would take some time and/or considerable disruption and expense, but at least it's technically doable.
I was thinking of the Fischer–Tropsch process, which is used by South Africa and was used in Germany in WWII. If you toss out environmental concerns (which would not be a factor in a full scale currency crisis), I think it becomes profitable at something like $60 a barrel oil?
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Old 09-25-2012, 01:09 PM   #36
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I would feel a lot more uneasy if the USA didn't have such vast reserves of coal, natural gas, shale oil, timber, copper, etc. If we really started to get into serious trouble with respect to the world's opinion of our currency, we could tap into those resources in a way almost unimaginable today. We really are sitting on top of a gold mine, so to speak.
Yeah, we'll need some way to pay back all that debt. Of course they'll have to strip-mine literally all of Wyoming and Montana but hey It's worth it.
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Old 09-25-2012, 01:41 PM   #37
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Yeah, we'll need some way to pay back all that debt. Of course they'll have to strip-mine literally all of Wyoming and Montana but hey It's worth it.
Never said it would be pretty, just that it is there as a last resort type of option that other countries may not have. If we lose our world currency status and our ability to import oil is cut off, it may be one of our few options.
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Old 09-25-2012, 02:45 PM   #38
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Lots of worry here in the DC area about the defense cuts. Don't have much hope our dysfunctional Congress will work this out. Glad we sold our other house.
Yup. I'm a little young for these forums and still w*rking... in the Defense Contracting industry.

There are all sorts of worries about the sequestration and how it effects current contracts and even contracts that were just awarded. Everyone is clenching their proverbial butts right now.
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Old 09-25-2012, 03:04 PM   #39
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I don't disagree, but it also demonstrates the stupidity of "temporary" tax cuts or tax hikes. Just make it permanent into law, and if the economic situation and/or political will changes in the future, change it again.

But in reality I am a strong supporter of VERY stable tax policy. The exact level of taxation or the exact number in each of the brackets is, within reason, less important to me than the certainty a very stable tax policy, not one likely to change with every change in political power in Washington, would provide for businesses, labor, consumers and investors.
+1.

This is a major beef I have with the present system. It has similarities to playing a game where your oponent can and does change the rules as the game progresses.
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Old 09-25-2012, 03:09 PM   #40
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Originally Posted by copyright1997reloaded View Post
I don't know about the rest of you, but one aspect of the expiring (end of 2012) rates that has my attention is the long term capital gains rate. Under the current rate structure, it is 15%. As of January 1, 2013, it is scheduled to rise to 20%.

As a result, I have some serious thinking to do on certain securities that I have a low cost basis on, that I've either had for a long period of time and a bunch of stuff I bought in the early 2009 time frame. That is, do I:
  1. Sell after the election if Obama wins, assuming re-election means the rates will be rising.
  2. Sell now, assuming everyone and their brother will be doing 1.
  3. Wait it out.
I normally try not to use taxes as input into my buy/hold/sell analysis of securities I own, but the differences in taxes between the 15% and 20% is significant.
I chose #2. This is sure to guarantee the Capital Gains tax cuts will be extended and equities will rise. Always do the opposite of what I do and you will prosper in the market.
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