Flyfish1
Thinks s/he gets paid by the post
OK - help me reason through this please. Sometimes, I get stuck in one train of thought so opinions are welcome.
In early December my old business sold to private equity and my multi year buy out received monthly was converted to a lump sum payment. Good and bad - that plus other income plopped me into the 37% bracket.
I did not spend any of that money - the majority went into a muni CEF and an MLP. I foolishly only saved 28% for taxes and sent that in already. The rest went into money market SWVXX , which is my capital expenditure fund for things like a new roof a new car, etc.. An important caveat here is I am an income investor and will not sell shares to offset the tax hit or future cap ex items. Also, I pride myself on reinvesting 10-20% of dividend income each month thus compounding my monthly income. Another important item is due to K-1's coming in late from real estate holdings I always file in Sept. or early October. So that gives me 9 months of tax holdings from my regular monthly dividends. Saving all that, plus what I already paid still leaves me about $50K short.
So here are my options as I see it: Pay the roughly $50K from my cap-ex account and slowly rebuild that over time or not. This allows me to continue my routine reinvestment plan and increase my income. But leaves me with a smaller cap-ex account. Or, divert all income earmarked for reinvestment, the majority of which is in an IRA, and use that to pay help down the estimated $50K of needed taxes. My tax rate will be much lower for 2026, but that move would increase income received..so..
Thanks
In early December my old business sold to private equity and my multi year buy out received monthly was converted to a lump sum payment. Good and bad - that plus other income plopped me into the 37% bracket.
I did not spend any of that money - the majority went into a muni CEF and an MLP. I foolishly only saved 28% for taxes and sent that in already. The rest went into money market SWVXX , which is my capital expenditure fund for things like a new roof a new car, etc.. An important caveat here is I am an income investor and will not sell shares to offset the tax hit or future cap ex items. Also, I pride myself on reinvesting 10-20% of dividend income each month thus compounding my monthly income. Another important item is due to K-1's coming in late from real estate holdings I always file in Sept. or early October. So that gives me 9 months of tax holdings from my regular monthly dividends. Saving all that, plus what I already paid still leaves me about $50K short.
So here are my options as I see it: Pay the roughly $50K from my cap-ex account and slowly rebuild that over time or not. This allows me to continue my routine reinvestment plan and increase my income. But leaves me with a smaller cap-ex account. Or, divert all income earmarked for reinvestment, the majority of which is in an IRA, and use that to pay help down the estimated $50K of needed taxes. My tax rate will be much lower for 2026, but that move would increase income received..so..
Thanks
