Liquidating a 10-bagger

[USGrant1962]

Quote:

Originally Posted by pb4uski Here ya go. https://www.kitces.com/blog/understa...p-up-in-basis/

Great link. I'm a big Kitces fan, and didn't think of searching his site for this specific issue. The first waterfall graphic (the one above) is my default situation for the next 10 years or so, and the second is what I'm looking at if I get some reasonable consulting income. I have not spent a ton of time contemplating the 0% capital gains rate, but am doing so now.

I'll download 2017 tax software shortly and run some scenarios.

Thanks for all the input so far. As I said, understanding the interactions of high CGs versus ordinary income is new to me.

I'm really interested in the idea of capital gains harvesting. I'm quite familiar with capital loss harvesting, but harvesting gains (now that I'll have no W-2 income to mess it up!) is new to me.

So now I'm wondering about harvesting gains versus Roth conversions. There was one question in the Kitces comments, but Michael didn't answer.

Discuss.

[audreyh1]

Quote:

Originally Posted by pb4uski I'll add one refinement... the first $18,550 of ordinary income would be taxed at 10% and then the remainder at 15%.

Oh sure - the example didn't have the exact brackets either.

[pb4uski]

Quote:

Originally Posted by audreyh1 Oh sure - the example didn't have the exact brackets either.

I know... I just didn't want someone reading it to think that the tax on ordinary income met of deductions and exemptions would be a straight 15%.

[kaneohe]

https://www.bogleheads.org/forum/viewtopic.php?t=86849

I like the chart by tfb on 12/11/11 that shows these concepts. To me it is more intuitive than the kitces picture and illustrates all the ideas discussed here:
LTCG/QDIV stacked on top of the ordinary income; deductions/exemptions carved out of the bottom of the stack (ordinary income); the start of taxable income (blue line) ;the 10% ordinary income bracket next; then the 15% bracket on ordinary income; the top of the 15% bracket as the demarcation line below which LTCG/QDIV is tax as 0% and above which they are taxed at 15%T.

sorry you had to search thru that thread...........don't recall how to just post that chart by itself.

[audreyh1]

here is that Bogleheads chart:

[pb4uski]

^^^^ that is a good one too.

[USGrant1962]

Yes, that graphic is helpful. It looks a lot like what I'm facing next year with a small amount of ordinary income and a large amount of LTCGs.