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http://boards.fool.com/thanks-phil-good-points-on-the-same-subject-but-30407934.aspx
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| Subject: Re: Long term cap gains tax rate - 0% | Date: 11/30/2012 8:51 PM | |
| Author: RBMunkin | Number: 117027 of 118608 | |
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Thanks Phil. Good points. On the same subject, but for different reasons, let me know if anyone sees any flaws in this investment tax savings strategy: First of all, I don't believe in letting the tax tail wag the investment dog, but here is an exception. Tax payers in the 10 and 15% tax brackets have had a zero long term capital gains tax rate for 5 years now. It is set to expire and go to 10% next year. But even regardless of it expiring next year, this would work. Sell all stocks that one has a gain on this year in taxable accounts and buy them back either right away, not at all if one doesn't want the stock any more, or on a dip if possible. That will reset ones basis to zero. Example: So if I have a stock I paid $50 x 200 shares = $10K, and it is now at $75, my basis is $10K, sale price $15K, $5K gain. If I sell it this year, with no cap gains tax for 15% tax brackets, and buy it back for the same $15K, my basis is now $15K instead of $10K. In a future year when I sell it for real, if the cap gains tax at that time applies to me, I will save $5K x the tax rate. Sound good? RB |
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