Stupid questions about capital gains

[intent]

Long-time accumulator, hoping to soon become a withdrawer here - and I wonder if you all could guide me through some basic capital gains questions.

I know realized capital gains are reported on form 1099-DIV, but when we're retired I'm going to need to manage our taxable income to stay under the ACA subsidy limit. I am planning on doing Roth conversions near the end of each year. So my questions are:

• Prior to selling shares of a fund in a taxable account, how can I estimate the capital gains?
• How can I see what the realized capital gains from a sale were prior to the end of the calendar year?

The funds are at Vanguard. I've tried searching their site for information on this, but have come up short. Is this just something that becomes obvious upon actually selling shares?

Perhaps I'm wrong (it's been known to happen ), but with so many early retirees managing income and doing Roth conversions, I'm thinking there must be a way to know what your capital gains were for the year prior to receiving the 1099-DIV.

Thanks in advance.

 

[RunningBum]

Look for the "Cost Basis" option under your account holdings. This tells you the potential short and long term gains and losses for your holdings. If you've already done some sales, you can see them under the "Realized Gains and Losses" tab.

My advice to go to your Profile & Account Settings under "My Accounts", and select the Cost Basis profile, and change your holdings to SpecID. This means you will be able to specify which shares you sell, giving you the best possible control of capital gains income. When you go to sell shares, that's where you select the shares to sell, and I believe it gives you the capital gains that will be incurred.

Another suggestion, also under your Account Profile, select the Dividends and Capital Gains Elections, and change to something other than Reinvest. There are a few good reasons to do this. For one, since you are no longer accumulating, this is a good way to take some cash, without having to sell shares. Second, you could be put into a wash sale situation with selling shares at a loss with a purchase in the prior or future 30 days. This just complicates things, and you can actually lose the tax benefit of a capital loss if one of the transactions is in an IRA.

 

[intent]

Thank you @RunningBum - that is extremely helpful.

 

[jebmke]

Capital gains distributions are reported on 1099-Div. Actual gains and losses from selling securities (for covered shares) are shown on 1099-B. For non-covered shares they are not reported on any form from your broker. You have to provide the details to calculate the gains and losses on your tax return for non-covered shares.

 

[Souschef]

Capital gains distributions are reported on 1099-Div. Actual gains and losses from selling securities (for covered shares) are shown on 1099-B. For non-covered shares they are not reported on any form from your broker. You have to provide the details to calculate the gains and losses on your tax return for non-covered shares.

The proceeds for non covered shares are reported on a 1099-B.You have to provide the details on the cost basis on your return.
It got a little messy for me. My late wife inherited some stock, so we had that stepped up basis. Then after she passed away, I inherited the stock, with a new stepped up basis.

 

[sengsational]

If the stuff you sell has always been at Vanguard, they have the basis (so the previous post about how to look it up is what you need). If it's been moved around and Vanguard doesn't have the basis, do the best you can in a spreadsheet to figure the basis, and use that when you do your taxes (and tax planning). I had some certificates and no brokerage house had the basis. I doubt the IRS is going to spend the time trying to second guess your honest attempt at getting an accurate basis.

 

[Rianne]

OP, we're in the same situation regarding the ACA subsidy limit. RunningBum's answer in post #2 is very helpful. I called VG and their agent walked me through exactly what the tax consequences were when we sold stock in a taxable account. The obvious thing is we had to sell that day to be accurate. And accuracy is key with the ACA. $1 over and you're scr__ed, so I understand.

 

[Rianne]

Look for the "Cost Basis" option under your account holdings. This tells you the potential short and long term gains and losses for your holdings. If you've already done some sales, you can see them under the "Realized Gains and Losses" tab.

My advice to go to your Profile & Account Settings under "My Accounts", and select the Cost Basis profile, and change your holdings to SpecID. This means you will be able to specify which shares you sell, giving you the best possible control of capital gains income. When you go to sell shares, that's where you select the shares to sell, and I believe it gives you the capital gains that will be incurred.

Another suggestion, also under your Account Profile, select the Dividends and Capital Gains Elections, and change to something other than Reinvest. There are a few good reasons to do this. For one, since you are no longer accumulating, this is a good way to take some cash, without having to sell shares. Second, you could be put into a wash sale situation with selling shares at a loss with a purchase in the prior or future 30 days. This just complicates things, and you can actually lose the tax benefit of a capital loss if one of the transactions is in an IRA.

BTW, I copied and pasted this in an e-mail to myself and will reference it in the future. Haha. OP your question is by no means stupid.

 

[intent]

Glad to hear I'm not alone. It just felt like one of those (many) things that everyone seems to just know, but I couldn't figure out for the life of me

Thank goodness for the knowledgeable members of this community.

It seems I'm fortunate that my holdings in question have always been at Vanguard, and all were purchased in or after 2015.

 

[Looking4Ward]

You also need to estimate and account for the capital gains the fund itself will distribute at the end of the year.

You can do so by checking under the "Distributions" tab of the fund profile page. It will show the actual realized capital gain/loss of the fund as of the end of the last reported month.

For instance, as of 7/31/20 the realized capital gain for Wellington Admiral has been $2.96 a share, or 3.97% of NAV:


Realized/unrealized gains as of 07/31/2020
Realized capital gain/loss $2.96
Realized capital gain/loss as a % of NAV 3.97%
Fiscal year end 11/30/2020