mountaintosea
Full time employment: Posting here.
- Joined
- Aug 6, 2006
- Messages
- 564
Anybody selling some of their stocks with the idea that long term capital gains may go up next year?
I would think at a minimum you would want to look at matching tax losses with gains you already have realized...not sure if I would sell "Gains" merely to offset losses...probably an investment rather than a tax call.
Tom Cat........possibly I may be misinterpreting what you said in the first sentence here but it sounds like if you have already realized gains, then you would want to look at taking losses to match. Isn't that very much an individual situation ..........if you were in the 15% bracket w/ gains that are, at least for now, free, taking matching losses would gain you nothing. What you would have gained once you reinvest would be a lower basis, setting you up for larger future taxable gains...........so TLH not for everyone.
I have about $11k in carryover stock sale loss from last year. My understanding is that $3k/year of that loss can be used to offset regular income and the rest could be used to offset gains from stock sales this year.
calmloki......not sure if you intended to phrase that 2nd sentence the way it is...but I think it is backwards: the carryover loss can be used to offset any capital gains (from sales or fund distributions). The leftover (if any) can be used to offset ordinary income (up to 3K/yr). For example if you had 11K in capital gains, the carryover losses would offset those and there would be nothing to offset against ordinary income.
One extreme is if you have no capital gains for the next few yrs. You get to use 3K/yr against ordinary income for 4 yrs (only 2K the last yr.) and, if you are in the 25% bracket, you gain 2.75K. The other extreme is if you use the losses against capital gains only. If you are in the 15% bracket for CG, you gain 1.65K. Of course in the real world rates are going to be changing in the new few yrs so that complicates things a bit and you have to derate the 1st example a bit to account for the fact that the benefits come over 4 yrs (time value of $$). My first impression though is that selling and then buying back HPQ might not give you the biggest benefit.
Just looked at the tax tables, and if my AGI was over $82,500 i guess any amount over that would be taxed at 28%, so if AGI was $85,500 a $3000 carryover loss subtraction would save me $840 in taxes the first year or $3080 over 4 years assuming no LTCG in those 4 years. Hmm - is the carryover loss applied to any LTCG, or only stock sale profits - very likely to sell a place next year. If it can be used against any LTCG, that might argue strongly for having no LTCGs this year, writing off $3000 toward ordinary income, and then using the rest of the carryover loss next year.