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Author: GLSHEFF Two stars, 250 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 19257  
Subject: Company stock and taxes Date: 3/27/2000 9:02 AM
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Not sure this is the correct place to pose this question but if not perhaps I can be directed to the correct board.

At 55, I have just retired. approx 90% of my retirement is in company stock which has appreciated approximately 300% above my cost basis. Electing to take this stock at cost basis results in taxable income of approx $90k. The wife and I are planning to build our retirement home requiring approximately $200K of this stock be sold. We have other assets but they are also mostly the same company stock. It seems to me that I am preparing to incurr a tremendous tax bite for next year's tax season, no matter how I do this. Does anyone have any advice on minimizing this tax liability short of not building the new home?

Any thoughts are welcome.
thanx
GLSHEFF
I have already decided to delay the bulk of the new home outlay untill next year to try to spread the bite over time but I understand that I will have to send in estimated tax payment in just this next quarter that will exceed my tax payment for 1999.
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Author: TMFExRO Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 3195 of 19257
Subject: Re: Company stock and taxes Date: 3/27/2000 10:08 AM
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<< At 55, I have just retired. approx 90% of my retirement is in company stock which has appreciated approximately 300% above my cost basis. Electing to take this stock at cost basis results in taxable income of approx $90k. The wife and I are planning to build our retirement home requiring approximately $200K of this stock be sold. We have other assets but they are also mostly the same company stock. It seems to me that I am preparing to incurr a tremendous tax bite for next year's tax season, no matter how I do this. Does anyone have any advice on minimizing this tax liability short of not building the new home? >>

I'm not sure what kind of plan you're dealing with here or what your options are. You might want to post this question on the Tax Strategies board, adding whatever information you have about the nature of the plan through which you bought the stock.

There are also many who would question the efficacy of having so much of your retirement assets in one stock. You might want to check out the Retirement Investing board.

I do have a thought about the new house. I'm assuming you plan to pay cash. Why not finance the construction through a mortgage, selling stock and incurring taxable income only as you need to?

<< I have already decided to delay the bulk of the new home outlay untill next year to try to spread the bite over time but I understand that I will have to send in estimated tax payment in just this next quarter that will exceed my tax payment for 1999. >>

Over on the Tax Strategies board there's an FAQ article about estimated tax requirements. Check it out for information on how you minimize your year 2000 estimated tax payments while avoiding a penalty for underestimating.

TMF ExRO
Phil Marti


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Author: Beaver1956 One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 3198 of 19257
Subject: Re: Company stock and taxes Date: 3/27/2000 1:45 PM
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If you took a Lump Sum distribution of your retirement account in 1999, check if you can do 5 year averaging(1999 is the last year it can be done). Also, if you meet certain requirements you can pay estimated taxes for 2000 based on 100% of your 1999 taxes.(This is advantageous if you think that your 2000 taxes will be higher than 1999). There will be no penalty no matter what the balance due is on 4/15/2001. It is a good idea to check ASAP with a good tax advisor.

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