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Applying the math per the example that AJ provided in her post and adjusting for the reality that some portion of the $60,000 in stock proceeds that you receive would actually be non-taxable return of your original cost basis, means that you have flexibility to pull out even a little more cash without tipping over into the 15% tax bracket. It is fair to say the example that AJ calculated represents a worst-case scenario where 100% of your stock sales are treated as capital gains (possible, but unlikely). The tip is to make sure that any stock sales you make result in qualified long-term gains and not short-term gains (which would be taxed differently at regular income rates unless some of your other stock sales create a loss that can be captured to off-set those short-term gains).

Yes, this is exactly correct. As you point out, I gave a worst case scenario with a $0 cost basis, not knowing anything about what the cost basis actually is. But unless it was a stock that provided significant return of capital, it's unlikely to have a $0 cost basis.

And thanks for the correction on the initial math mistake.

AJ
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