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Author: csapidus Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 120820  
Subject: Year-end and 0% Capital Gains, Basic Questions Date: 12/23/2013 9:51 PM
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My apologies if this is well-trodden territory, and for the extremely basic nature. Just want to make sure I'm fully understanding this.

Hypotheticals for single unemployed 30-yo US taxpayer, 2013:

earned income: $0
1099-DIV/INT income: $11,250

(1) If I'm understanding the 0% scenario correctly, this person should absolutely try to harvest $25,000 in long-term capital gains (the $36,250 limit - $11,250 above). From a Federal taxation perspective anyway; let's ignore state-specific issues.

(2) Is the $6,100 standard deduction in any way advantageous? In other words, can it be used to harvest an additional $6,100 in LT gains (either directly, or indirectly through reducing the 1099 income), or can it only be applied to earned income?

(3) Is there a wash rule application to watch out for here? There's obviously no loss involved in the harvest, but it does serve to eliminate future taxation of the $25,000. So, if one were to sell, say, AAPL on Dec 27 and then repurchase AAPL on Jan 2 - essentially solely to reduce their basis - would this be disallowed?

Thanks for any clarification!
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