Capital Gains in 2009

[bizlady]

Trying to do some end of year tax planning.

Anyone thought about capital gains for 2009?

 

[ziggy29]

Seems like it might be worth considering for some people who did a lot of tax-loss harvesting in 2008 and are carrying over a lot of capital losses into this year.

 

[harley]

I'm hoping the MFs are still carrying losses from last year, and will still be doing so in 2010. I'm busy trying to minimize my income for next year so I can be in a very low bracket when I convert my IRAs to Roths. Also hoping that if the current market rise is a sucker's rally that it will drop again before I do the conversion. After that it is wecome to go up as high as it wants.

 

[FIREd]

I did a rare rebalancing act in my taxable account yesterday because the market has risen so much, so fast that new contributions were not enough to bring my AA back in line with my target. The capital gains generated will be offset by losses incurred earlier in the year (TLH) and last year (capital loss carryover).

 

[LOL!]

I did tax-loss harvesting in 2008 and again in March-May of 2009. I will not have any net capital gains for several years even if I was withdrawing at the 6% level or doing any rebalancing. I am running an extremely tax-efficient portfolio with all the fixed income in tax-sheltered and all the rebalancing going on there as well. Our income taxes should be about one-third what they were in 2007.

 

[Dawg52]

Trying to do some end of year tax planning.

Anyone thought about capital gains for 2009?

Enough capital losses to carry me to my grave.

 

[RustyShackleford]

How does one go about estimating what one's capital-gains
distributions are going to be - given that they typically occur
in December ? Mostly Vanguard funds and ETFs ...

I guess it doesn't really matter, does it, because like many
savvy investors here, thanks to last year, I have enough
capital-loss carry-over to last well past the apocalypse.
And these offset the CGDs, since they're all on Schedule D,
no ?

 

[LOL!]

ST cap gains distributions from funds are treated as ordinary income and not offset by your cap loss carryover. LT cap gains distributions do end up on Schedule D to be offset by losses.

Fund families will put up estimates on their websites in November. If you need estimates before then, you can go by what happened last year.

 

[audreyh1]

How does one go about estimating what one's capital-gains
distributions are going to be - given that they typically occur
in December ? Mostly Vanguard funds and ETFs ...

About a month before - or sometimes two - the fund company will provide a best guess estimate and actual dates. I start looking for this in October.

Audrey

 

[SecondCor521]

ST cap gains distributions from funds are treated as ordinary income and not offset by your cap loss carryover.

I'm not sure this is correct.

ST cap gains, when they end up being taxed, are taxed at your marginal rate, I believe. But I thought STCGs did go on schedule D and would be offset by the carryover (probably after the carryover was applied to any LTCGs).

But I've never been in that situation, so I don't know for sure.

2Cor521

 

[kaneohe]

Originally Posted by LOL!
ST cap gains distributions from funds are treated as ordinary income and not offset by your cap loss carryover.

I'm not sure this is correct.
ST cap gains, when they end up being taxed, are taxed at your marginal rate, I believe. But I thought STCGs did go on schedule D and would be offset by the carryover (probably after the carryover was applied to any LTCGs).
But I've never been in that situation, so I don't know for sure.
2Cor521

SC521----you are both right but you are talking about 2 somewhat different things. LOL is talking about STCG DISTRIBUTIONS from funds....there is no place on the 1099 for STCG and they are reported as DIV (nonqualified) so end up being treated as ordinary income.

You are talking about STCG.....like if you sell a fund for a STCG . In this case, it would go on Sch D and could end up being offset by the CG carryover. Don't know why they are treated differently.

 

[SecondCor521]

kaneohe,

Whoops, skipped right over the "from funds" part of what LOL wrote.

Thanks for the clarification.

2Cor521

 

[youbet]

Thanks kaneohe! That helped me understand a concept I've never been quite clear on.

 

[haha]

I thought I had $30,000 in CG carryovers from 2008, so I went ahead and took $15,000 is ST gains several days ago in anticipation of soft markets.

Then I finally figured out how to get TTax to correctly handle partnership sales and found out that not only did I not have a $30,000 loss from '08, I had a $28,000 net (LT) gain.

Thus the $15,000 STG I just took will be fully taxable on my 2009 return. I think that is the first time I made a blunder that big. Earlier I expected a result much like I eventually did get, but I was so happy to see TTax cough out a better result that I just acted hastily.

Fortunately I hadn't mailed off the return.

Ha

 

[Martha]

Wow, that is a big swing.

We have one real estate investment that is struggling. The managing member of the LLC managed to get a write down of the mortgage debt. That will be passed through as income to us members (over a several year period). Talk about a kick in the teeth. Not sure we will ever get our investment back plus now we have phantom ordinary income from the forgiveness of debt.

Oops!

 

[haha]

Wow, that is a big swing.

We have one real estate investment that is struggling. The managing member of the LLC managed to get a write down of the mortgage debt. That will be passed through as income to us members (over a several year period). Talk about a kick in the teeth. Not sure we will ever get our investment back plus now we have phantom ordinary income from the forgiveness of debt.

Oops!

I was sure surprised when I learned about this principle some years ago. If I remember, even when you sell your loss will not cancel the ordinary income you received due to the debt forgiveness.

Ha

 

[Martha]

I was sure surprised when I learned about this principle some years ago. If I remember, even when you sell your loss will not cancel the ordinary income you received due to the debt forgiveness.

Ha

What bugs me about it is that we have no personal liability for the debt so "logically" there is no forgiveness of indebtedness. But then again, LLCs are pass through of tax consequences so by another logic we are stuck with the tax consequences benefits and burdens of the LLC, including debt forgiveness.

 

[Nords]

We've been trying to have a "quiet tax year" so that I can file the college-aid FAFSA on 2 Jan.

However we took a little off the table last month from a small-cap value ETF, although that'll be more than offset by 2008's tax-loss harvesting.

TurboTax 2009 ships in a few weeks, so gosh, I could have the rental property schedule nearly finished before Thanksgiving!