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Financial Planning / Tax Strategies


Subject:  When you leap from one bracket to the next Date:  12/6/1999  12:34 AM
Author:  neilandrews Number:  22339 of 132160

Howdy Fools,
I understand that the capital gains tax rate (for those in the 15% bracket) who hold their stocks for more than a year is 10%.
What I can't figure out is this: What if the income generated from capital gains puts one OVER the 15% tax rate into the next tax rate? That is, say I'm just a few thousand dollars over the 15% tax bracket because of my capital gains. Should I sell long or short?
I'm in this situation because, as a student, most of my income comes from dividends, interest and cap gains. And the cap gains may be just enough such that I make it into the next income bracket. Being in the 15% bracket, it's clear that I should hold for at least a year and a day. But if I'm nudged just a bit into the next bracket by my capital gains, what should I do--hold for less than a year or for more than a year?

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