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First of all, I don't believe in letting the tax tail wag the investment dog, but here is an exception.

Tax payers in the 10 and 15% tax brackets have had a zero long term capital gains tax rate for 5 years now. It is set to expire and go to 10% next year. But even regardless of it expiring next year, this would work.

Actually, the 10% bracket is scheduled to go away, and the lowest rate will be 15%. But long-term gains would be taxed at a maximum 20%, for those above the 15% bracket. But I don't think that affects your strategy.

Sell all stocks that one has a gain on this year in taxable accounts and buy them back either right away, not at all if one doesn't want the stock any more, or on a dip if possible.

That will reset ones basis to zero.

To be picky, it doesn't reset your basis to zero, it gives you a new basis equal to current value, and unrealized gains of zero.

A couple of potential problems:
1. You have to make sure that your realized gains don't put you above the 15% bracket.
2. The realized gains are included in your income. For retirees in the lower brackets who can use this strategy, this can increase the amount of Social Security benefits that are taxable. And there may be other phaseouts affected too.
3. And if you have capital loss carryovers from prior years, you're going to burn those up in a strategy that saves you zero current taxes, by selling stocks you want to keep.

Beyond that, the plan would work as you suggest.

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