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Author: SeniorCit Three stars, 500 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 121599  
Subject: Re: Cash in on current Tax Rates Date: 11/12/2012 3:57 PM
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I currently own long term BRK-B’s with a gain, if sold of over $45,000.

I have carry over losses in my taxable account of about $50,000. (from a loss in another stock going way back.)

I am pretty certain that my Brokerage company will do a sale from my account of all my BRKB shares and simply transfer them back to my account at the price sold. ( I know I have had them sell shares in my IRA account and transfer them into my taxable account at the price at time of sale. That is what I do when taking my MRD each year.)

Why are you doing this? You don't have to sell the shares in your IRA and repurchase them in your taxable account. Simply move the shares. Their value at the time of the transfer is the amount of your IRA distribution and your basis in the taxable account, and your holding period begins on the date of transfer.

Yes, I misspoke. For the IRA MRD transfer, I simply called Fidelity, and they transferred the shares at the closing price that day. I also called them today and find they cannot transfer the brokerage shares in my taxable account at the closing price. The shares would need to be sold and then bought back.

All my BRKB shares are showing a capital gain so there will be no problem of the Wash Sale rule taking effect.

I ran a trial run with my 2011 Tax Cut software and it totally offset the gains from the proposed sale with the carry over losses and there was no increase in taxes for the year.

I realize that the $50,000 carry over losses would cover many $3,000 yearly Capital Gains losses.

I'm not sure whether you mis-typed or don't understand how the carryover works. It's first applied to any realized gains during the year, then $3,000 is applied to ordinary income such as your IRA distribution.

Yes I realize that the carryover losses first apply to gains and then $3,000 to ordinary income.

Doing this sale will enable me to reset my cost basis, many of which are in $55-65 range.

And I would be able to take advantage of the current 15% tax rate rather than the 23.8%.


??? If you wipe out the gain with the carryover there is no tax rate to apply. (I also don't know where you got the 23.8% rate, which is nowhere in current or January 1 tax law.)

I think I was adding in the 3.8% for the Obama care.

I don't see a reason for the rush. Whether you sell now or somewhere down the road, the carryover is going to wipe out most, if not all, of the gain, so it's irrelevant what the rate is when you sell. In addition, you're using that carryover to wipe out $3,000 of ordinary income, which is never going to be taxed at a lower rate than LTCG's. If you die before using up the carryover it dies with you, but that's irrelevant too since your heirs would inherit with a stepped-up basis.

Phil
Rule Your Retirement Home Fool

After sorting this out a little, and finding that I can't in effect, sell the share to myself at the same price but would need to place a limit order, I agree, "There is not reason for the rush."
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