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Any legal way to avoid short term capital gains?
Posted on 9/9/20 at 10:43 pm
Posted on 9/9/20 at 10:43 pm
I have significant tech gains from 01/20 (including ? and TSLA). If the tech sector comes back even a little I'd like to cash alot out. I already have retirement accounts and can't switch it into any of those. Is there any good strategy to avoid the extra 20% hit from realizing the short term capital gains. I expect these stocks will be down near the end of the year, especially with the uncertainty following the election which seems inevitable.
8
Posted on 9/9/20 at 10:47 pm to pensacola
quote:Serious question - didn't that factor into your decision to buy them?
I expect these stocks will be down near the end of the year
Posted on 9/9/20 at 11:05 pm to Spirit of Dunson
In January, he was supposed to know Tesla was going to quadruple and he'd have substantial gains he needed to protect?
Posted on 9/10/20 at 12:20 am to pensacola
Well, if you expect them to lose less than the 20% in excess taxes you would pay by selling you could just hold for a long term capital gain.
Posted on 9/10/20 at 4:21 am to Spirit of Dunson
quote:Why even go to work if you have to pay all them taxes?
Serious question - didn't that factor into your decision to buy them?
Posted on 9/10/20 at 5:22 am to pensacola
Have any other stocks with losses that you’re willing to sell?
Posted on 9/10/20 at 5:51 am to pensacola
Give it all to charity
Posted on 9/10/20 at 6:27 am to pensacola
Pay them
If biden wins he'll probably raise the short term cap gain to 47%
If biden wins he'll probably raise the short term cap gain to 47%
Posted on 9/10/20 at 6:50 am to whitefoot
quote:well, if he only thought they would increase a marginal amount, then the tax on the windfall shouldn't be a big deal. If I buy something for the long term, and it goes up a ton, I either cash out to capture the gains and see the tax as part of that calculation, or I hold for the long term.
In January, he was supposed to know Tesla was going to quadruple and he'd have substantial gains he needed to protect?
Posted on 9/10/20 at 9:19 am to Spirit of Dunson
quote:
If I buy something for the long term, and it goes up a ton, I either cash out to capture the gains and see the tax as part of that calculation, or I hold for the long term.
Right. And that's what he's asking about. Are there any tricks to lessen the taxes on short term gains. I'm pretty sure the answer is no, but there are people on this board way more knowledgeable in tax law than me.
I don't think in January anyone could have predicted this level of volatility and uncertainty in the market. If he should have expected volatility because it's an election year, then just look at 2016. The vix was around 12 in January of 2016, and never got above 20 except for election day, when it went up to 22. This year, the vix hasn't been below 22 since March.
You might think it was a dumb question, but you're acting like he should have planned for his stocks to increase 4x in 9 months and that there would be unprecedented market volatility.
Changing course and protecting gains after an incredible run seems prudent. Asking the Money Board for tax advice doesn't seem like something that should open a person up for ridicule.
Posted on 9/10/20 at 9:25 am to whitefoot
Those are all fair points. And I am honestly sorry for coming off as rude, but my question was sincere... I was genuinely curious if the OP thought about short term cap gains taxes before he bought them.
Posted on 9/10/20 at 9:29 am to pensacola
You don't actually pay the taxes until you write the check to the IRS.
If you want to avoid paying taxes you can do the following:
1. Sell your stock.
2. Convert the proceeds to another currency (a cryptocurrency would make sense in this application).
3. Renounce your US citizenship.
4. Move to a country without extradition agreement with the US.
5. Enjoy.
Note: you may want to routinely monitor the the status of extradition b/w the US and the country to which you abscond.
If you want to avoid paying taxes you can do the following:
1. Sell your stock.
2. Convert the proceeds to another currency (a cryptocurrency would make sense in this application).
3. Renounce your US citizenship.
4. Move to a country without extradition agreement with the US.
5. Enjoy.
Note: you may want to routinely monitor the the status of extradition b/w the US and the country to which you abscond.
Posted on 9/10/20 at 10:27 am to pensacola
1) Wait until you hit a year, and then sell them the next day, which makes them long term gains, at a lower rate.
2) Sell losers in your portfolio (doesn't matter if they are short term or long term losses)
3) Instead of selling them, donate the shares to charity and get a charitable deduction for their fair market value.
Also, short term gains aren't taxed at 20%, they are taxed at whatever your marginal rate is. If you are subject to net investment income tax, it's an extra 3.8% tax as well.
2) Sell losers in your portfolio (doesn't matter if they are short term or long term losses)
3) Instead of selling them, donate the shares to charity and get a charitable deduction for their fair market value.
Also, short term gains aren't taxed at 20%, they are taxed at whatever your marginal rate is. If you are subject to net investment income tax, it's an extra 3.8% tax as well.
Posted on 9/10/20 at 11:26 am to jmcwhrter
quote:dems do seem to think they are dictators. He probably wouldn't remember there's a congress.
If biden wins he'll probably raise the short term cap gain to 47%
Posted on 9/10/20 at 11:29 am to pensacola
If you have any stocks that are down, sell them for a loss to balance.
Or on a not serious note, go to r/WSB on reddit and make some lotto options purchases. That looks to be a great way to lose gains.
Or on a not serious note, go to r/WSB on reddit and make some lotto options purchases. That looks to be a great way to lose gains.
This post was edited on 9/10/20 at 11:34 am
Posted on 9/10/20 at 11:51 am to KamaCausey_LSU
quote:
If you have any stocks that are down, sell them for a loss to balance.
This is what I would do. Use the opportunity to flush some losers and start new positions in stocks you might have liked long term at a lower cost basis.
Posted on 9/10/20 at 1:37 pm to whitefoot
Thanks for the input, guys. I have already sold the losers to offset some of the short term gains. I will be paying about 20% more on short term vs long and was looking for any good ideas.
Posted on 9/10/20 at 2:06 pm to pensacola
Just don’t sell too many losers. You can only claim up to 3000 in losses assuming you don’t rebuy the stock within the next 30 days.
Posted on 9/11/20 at 2:16 pm to jangalang
If one had a 10k short term loss on ABC and 10k Short term gain on XYZ wouldn’t that even out to zero gain?
I thought 3k was the annual loss carry over if ones losses exceeded gains.
I thought 3k was the annual loss carry over if ones losses exceeded gains.
Posted on 9/11/20 at 5:44 pm to jangalang
quote:
Just don’t sell too many losers. You can only claim up to 3000 in losses assuming you don’t rebuy the stock within the next 30 days.
Carries over indefinitely so not a big deal if you go over.
And that’s an overall 3,000 loss. So if you had a 10,000 gain, you could take a 13,000 loss.
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