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<<<<I suppose you could. My question is why would you cash out your stocks if you are doing well unless you need the money. Why not let it ride? LTCG tax is a 20% maximum so how big would the hit be later?>>

Ah...forgot to mention that most of my gains are either through daytrading (hiss!) or risky small-caps. The LTBH portion of my portfolio is not as big right now. That being said, does my strategy work?>>

Ahhh...yesss...the tax pro's nightmare. After you work out the strategy, the client casually says..."By the way...did I mention that...."

Since your gains are from daytrading, you likely HAVE no long term capital gains. In order to receive long term treatment, you have to hold the shares for more than one year. So any gains that you realize will be short term in nature...and taxed at your ordinary tax rate. That could be as low as 15%, or as high as 39.6%...depending on your other income.

So, that being the case, it would likely be in your best interest to sell enough to "fill up" the 15% bracket, and get those gains out of the way and taxed at the lowest possible rate. Once you gain employment, it's likely that you be in (at least) the 28% bracket. So if you can generate some tax savings this year, it would certainly make sense to do so.

Don't EVER confuse long term gains with short term gains. The misunderstanding could damage your financial health.

TMF Taxes

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