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Thanks WeeBeastie for your detailed reply.

However I am still confused about the witholding tax.
The effective purchase price of his shares was approx $17,500, but they are now worth less than $4,500. Would he have 31% of the $4,500 sale proceeds withheld immediately, or does he, as in this country have until the end of the tax year to work out any taxable gain and pay the tax , or alternatively claim a loss.

Also in the UK there is a flexible tax shelter vehicle called an ISA. It is not aimed simply at retirement as the common US tax shelters seem to be. Is there anything like this in the US?

Also is it possible, as here, to sell shares outside a tax shelter and thereby crystallize a gain/loss, and then buy back inside an ISA tax shelter without involving any 30 day 'tax wash' rules.

I take it from what you wrote that there is no specific tax exeption for capital gains (like the $10.000 pa allowance in the UK). But $3.000 can effectively be ignored by setting it against income tax.

Thanks for any help you can give.


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