Message Font: Serif | Sans-Serif
 
UnThreaded | Threaded | Whole Thread (16) | Ignore Thread Prev Thread | Next Thread
Author: mapicsman One star, 50 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 121095  
Subject: Taking a Long Term Capital Gain Date: 12/10/2007 11:56 PM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 0
If I sell a stock this week which produces a long term capital gain on my 2007 taxes, are there any tax ramifications if I repurchase the same stock the next day (other than establishing a new basis)?
Print the post Back To Top
Author: TMFPMarti Big funky green star, 20000 posts Home Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 97162 of 121095
Subject: Re: Taking a Long Term Capital Gain Date: 12/11/2007 12:22 AM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 1
If I sell a stock this week which produces a long term capital gain on my 2007 taxes, are there any tax ramifications if I repurchase the same stock the next day (other than establishing a new basis)?

Also a new holding period.

No, I'm not aware of any taxing authority that objects to your deciding to increase your tax liability. Are you sure you want to do this?

Phil

Print the post Back To Top
Author: Wradical Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 97163 of 121095
Subject: Re: Taking a Long Term Capital Gain Date: 12/11/2007 12:30 AM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 0
If I sell a stock this week which produces a long term capital gain on my 2007 taxes, are there any tax ramifications if I repurchase the same stock the next day (other than establishing a new basis)?
________________________________________
Not much. But why do it?

You're picking up a taxable gain, and converting a long-term position to a short-term position. Your holding period for the new shares will start when you buy them.

Do you qualify for the 5% rate this year, so as to jack up your basis by paying minimal tax? If you stay in a low bracket, the gain will be 0 in 2008.


Bill

Print the post Back To Top
Author: billjam Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 97164 of 121095
Subject: Re: Taking a Long Term Capital Gain Date: 12/11/2007 8:46 AM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 0
<<<If I sell a stock this week which produces a long term capital gain on my 2007 taxes, are there any tax ramifications if I repurchase the same stock the next day (other than establishing a new basis)?
________________________________________
Not much. But why do it?

You're picking up a taxable gain, and converting a long-term position to a short-term position. Your holding period for the new shares will start when you buy them.

Do you qualify for the 5% rate this year, so as to jack up your basis by paying minimal tax? If you stay in a low bracket, the gain will be 0 in 2008.>>>


No problem if you have a gain. You can repurchase immediately.

Among the reasons to do this now and raise basis are being quite confident you'll jump from the 5% tax bracket to the 15% bracket on cap gains in future years. Also, in my case I'll be on partially taxed SS next year. Every $ of cap gains will make more of my SS taxable at regular tax rate. My spreadsheet shows the effect of this is my '08 cap gains will be taxed at nearly 10% effectively even though the cap gains themselves will be taxed at 0%.

Print the post Back To Top
Author: GalinAZ Three stars, 500 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 97167 of 121095
Subject: Re: Taking a Long Term Capital Gain Date: 12/11/2007 12:08 PM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 0
Please explain capital gains being 0 percent in 2008?

Print the post Back To Top
Author: irasmilo Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 97168 of 121095
Subject: Re: Taking a Long Term Capital Gain Date: 12/11/2007 12:14 PM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 0
Please explain capital gains being 0 percent in 2008?

The long term capital gains tax rate for those who are in the 10% or 15% regular income tax brackets will be 0% in 2008. This is a reduction from the current 5% rate. Whether the 0% rate is rescinded after one year may depend on what happens in the 2008 elections.

Ira

Print the post Back To Top
Author: GalinAZ Three stars, 500 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 97170 of 121095
Subject: Re: Taking a Long Term Capital Gain Date: 12/11/2007 12:55 PM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 0
That sounds like good news for me! The top of the MFJ 15% tax bracket for 2008 is $61K right? So, I can minimize our income to stay under that and any other needs cover by selling some long term positions and taking the capital gains. Is there any limit on the amount of capital gains I can take at 0%?

Print the post Back To Top
Author: ziggy29 Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 97172 of 121095
Subject: Re: Taking a Long Term Capital Gain Date: 12/11/2007 1:03 PM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 2
>> That sounds like good news for me! The top of the MFJ 15% tax bracket for 2008 is $61K right? So, I can minimize our income to stay under that and any other needs cover by selling some long term positions and taking the capital gains. Is there any limit on the amount of capital gains I can take at 0%? <<

Yes -- generally, the long-term gains "taxed" at 0% will be limited to the amount of gains which would kick you into the 25% income tax bracket. Long-term capital gains above and beyond that amount would be taxed at 15%.

For example, if you would be $10,000 below the bottom of the 25% bracket *before* considering any long-term capital gains, in 2008 the first $10,000 of long-term gains are considered as being in the 15% marginal income tax bracket, resulting a 0% rate (or 5% in 2007). Capital gains above and beyond this level put your total income into the 25% bracket and would be taxed at the 15% rate.

I think I got that right, but I'll add the disclaimer that I'm not a CPA or a tax pro.

#29

Print the post Back To Top
Author: TMFPMarti Big funky green star, 20000 posts Home Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 97173 of 121095
Subject: Re: Taking a Long Term Capital Gain Date: 12/11/2007 1:05 PM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 1
The top of the MFJ 15% tax bracket for 2008 is $61K right?

$65,100. http://www.irs.gov/newsroom/article/0,,id=174876,00.html

So, I can minimize our income to stay under that and any other needs cover by selling some long term positions and taking the capital gains. Is there any limit on the amount of capital gains I can take at 0%?

Yes. The top of the 15% bracket. Remember that your LTCG add to taxable income even though there's a special calculation method of the actual tax.

Phil

Print the post Back To Top
Author: mapicsman One star, 50 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 97178 of 121095
Subject: Re: Taking a Long Term Capital Gain Date: 12/12/2007 1:07 PM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 0
Thanks for the replies. I didn't think that the government would object to my paying taxes now rather than later.

I have a large (for me) amount of dollars in stocks that will generate long term capital gains. Earlier this year I sold other stock with a large long term capital loss and I wanted to sell enough of the winner to take advantage of the 5% LTCG tax rate and to rebuy it because I expected it to begin a strong new growth spurt by the start of the year.

I plan to take advantage of the 0% rate the next two years and may even take advantage of the 15% rate because I expect these low rates to expire in 2010 with the current make up of congress.

Do you see anything wrong with my plans? If there is a better way, I would appreciate hearing about it.

Print the post Back To Top
Author: ziggy29 Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 97179 of 121095
Subject: Re: Taking a Long Term Capital Gain Date: 12/12/2007 1:17 PM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 0
>> I plan to take advantage of the 0% rate the next two years and may even take advantage of the 15% rate because I expect these low rates to expire in 2010 with the current make up of congress. <<

For those who have more LTCG than they can use in the 0% bracket in 2008 *and* who are in the 15% marginal bracket for 2007, it might not be a bad idea to take advantage of the 5% rate this year, too. I wouldn't assume these rates will last in 2009, let alone 2010, depending on the outcome of the 2008 election.

I'd be using 2007 and 2008 to lock in as many long term gains at 0-5% as I could, consistent with the long-term goals of my taxable portfolio. I don't trust that these rates will be around in 2009, let alone 2010 and beyond. I believe these are scheduled to last through 2009, but they could be repealed in '09 if there's a president more willing to do so.

#29

Print the post Back To Top
Author: NevadaGolfer Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 97184 of 121095
Subject: Re: Taking a Long Term Capital Gain Date: 12/13/2007 4:23 AM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 0
I'm going to jack up my 401k withholding next year from the minimum to capture full matching to nearly the 15k limit. This is to lower my taxable income and give me more 0% capital gains next year since I'll probably step up my cost basis on one or more big stock winners.

Next year I expect to blow away Buffet's ~17% total income tax rate which includes payroll taxes, dividends, capital gains, and other income. That's pretty hard to do for working stiffs. Hoping to have nearly 100k income and pay under 10k total income taxes including payroll (full 15.3% being counted, not just "my" half), income, dividends, and capital gains.

Hope the AMT doesn't bite me in the ass...

Print the post Back To Top
Author: vickifool Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 97185 of 121095
Subject: Re: Taking a Long Term Capital Gain Date: 12/13/2007 7:24 AM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 0
I'm not aware of any taxing authority that objects to your deciding to increase your tax liability. Are you sure you want to do this?

Given how much the war in Iraq is costing, tax rates will have to go up.

Cost of Iraq war:
Source: Congressional Budget Office report dated October 24, 2007
"Estimated Costs of U.S. Operations in Iraq and Afghanistan and of Other Activities Related to the War on Terrorism"
http://www.cbo.gov/ftpdocs/86xx/doc8690/10-24-CostOfWar_Testimony.pdf

Tax rates due to Vietnam war:
http://www.ctj.org/pdf/regcg.pdf

Vickifool

Print the post Back To Top
Author: PuddinHead42 Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 97216 of 121095
Subject: Re: Taking a Long Term Capital Gain Date: 12/16/2007 11:56 AM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 0
I have wondered about this exact situation too, and wondered about the exact meaning and scope of the wash rule. The intent of the wash rule was to insure you are "at risk" when selling and buying a stock back. Clearly if you sell for a loss and buy back the next day, the IRS will no let you deduct the loss. But in your case, are you still covered by the rule. You a selling today to report a gain and buying tomorrow, but if you now sell that stock a few months or years from now at a loss, can you take it? Since you once bought and sold withing 30 days, can you now take the loss? Could the IRS say "if you had just held that stock back in 2007, the loss you want to report now would not really have existed, it just would have decreased your gain, so therefore you were not at risk and you can't take your loss now"? I have never asked a certified tax person this question. Surely this board has one that could answer?

P.

Print the post Back To Top
Author: irasmilo Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 97218 of 121095
Subject: Re: Taking a Long Term Capital Gain Date: 12/16/2007 1:16 PM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 5
I have wondered about this exact situation too, and wondered about the exact meaning and scope of the wash rule. The intent of the wash rule was to insure you are "at risk" when selling and buying a stock back. Clearly if you sell for a loss and buy back the next day, the IRS will no let you deduct the loss. But in your case, are you still covered by the rule. You a selling today to report a gain and buying tomorrow, but if you now sell that stock a few months or years from now at a loss, can you take it? Since you once bought and sold withing 30 days, can you now take the loss? Could the IRS say "if you had just held that stock back in 2007, the loss you want to report now would not really have existed, it just would have decreased your gain, so therefore you were not at risk and you can't take your loss now"? I have never asked a certified tax person this question. Surely this board has one that could answer?

I would suggest spending some time with IRS Pub. 550, Investment Income and Expenses, www.irs.gov/pub/irs-pdf/p550.pdf. The wash sale rule has nothing to do with being "at risk". It has everything to do with generating a loss when there is no change in your economic position. Once you sell for a gain, everything is history. When you sell for a loss, the only thing that gets looked at is whether you purchased and still hold substantially identical securities within 30 days before or after the sale date.

Ira

Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Print the post Back To Top
Author: TMFPMarti Big funky green star, 20000 posts Home Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 97223 of 121095
Subject: Re: Taking a Long Term Capital Gain Date: 12/16/2007 10:26 PM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 1
You a selling today to report a gain and buying tomorrow, but if you now sell that stock a few months or years from now at a loss, can you take it?

Yes, assuming that sale didn't become a wash sale through a purchase within 30 days. Wash sale rules apply only to a sale for a loss.

Phil

Print the post Back To Top
UnThreaded | Threaded | Whole Thread (16) | Ignore Thread Prev Thread | Next Thread
Advertisement