Tax discussion, strategies and questions

[Speedr117]

I can't remember where I heard this, but "Don't let the tax tail wag the investment dog."

Do you expect TSLA to go up more than 7% next year?

Other thought is sell on the last day of 2022, then turn around and buy it back on the first trading day of 2023. If the capital gains are wiped out by the medical expenses, then all you're doing it resetting your costs to a higher amount, thereby saving the tax in the future. Of course, there's a slight risk if the stock spiked over that close/open period, but it seems like a low risk.

As always, not financial advice, just a paid actor, yada yada yada...

 

[bkp_duke]

Other thought is sell on the last day of 2022, then turn around and buy it back on the first trading day of 2023. If the capital gains are wiped out by the medical expenses, then all you're doing it resetting your costs to a higher amount, thereby saving the tax in the future. Of course, there's a slight risk if the stock spiked over that close/open period, but it seems like a low risk.

As always, not financial advice, just a paid actor, yada yada yada...

Wash rule. Gotta wait 30 days.

 

[Speedr117]

Wash rule. Gotta wait 30 days.

Good point! Then maybe buy some kind of Calls to protect against the stock mooning, but a short time duration so it's not expensive (i.e. 30 days), so you're completely back in after 30 days.

 

[2daMoon]

Other thought is sell on the last day of 2022, then turn around and buy it back on the first trading day of 2023. If the capital gains are wiped out by the medical expenses, then all you're doing it resetting your costs to a higher amount, thereby saving the tax in the future. Of course, there's a slight risk if the stock spiked over that close/open period, but it seems like a low risk.

As always, not financial advice, just a paid actor, yada yada yada...

I don't completely understand @wipster situation, but, if he has medical expense that will offset CapGains, then another thing to consider may be a rollover into a Roth. Make use of the offsetting tax, keep the shares, and earn interest tax free gains.

Edit: don't know why I wrote "interest free" Corrected to "tax free"

 

[wipster]

I don't completely understand @wipster situation, but, if he has medical expense that will offset CapGains, then another thing to consider may be a rollover into a Roth. Make use of the offsetting tax, keep the shares, and earn interest free gains.

Thanks but I'm 66, prolly too old. I'll check it out though, thanks for the suggestion!

 

[2daMoon]

Thanks but I'm 66, prolly too old. I'll check it out though, thanks for the suggestion!

I don't think there is an age limit, but, you do have to wait 5 years before withdrawing from it without penalty.

Here's a link explaining it.

Also, original post should have read "tax free" gains, not "interest free" and has been corrected.

 

[ggr]

Devil's advocate here, but if you asked me this question last year, I would have said yes . . . and been dead wrong.

Yeah, me too. Or three.

 

[mongo]

Wash rule. Gotta wait 30 days.

@wipster is selling for a gain (just less of one due to stock price decrease). No wash rule.

 

[wipster]

I don't think there is an age limit, but, you do have to wait 5 years before withdrawing from it without penalty.

Here's a link explaining it.

Thanks @2daMoon, I'll check it out!

 

[wipster]

Other thought is sell on the last day of 2022, then turn around and buy it back on the first trading day of 2023. If the capital gains are wiped out by the medical expenses, then all you're doing it resetting your costs to a higher amount, thereby saving the tax in the future. Of course, there's a slight risk if the stock spiked over that close/open period, but it seems like a low risk.

As always, not financial advice, just a paid actor, yada yada yada...

That's actually what I was thinking! I'm only planning on selling a small amount of my total anyway. Thanks @Speedr117 !

 

[wipster]

Other thought is sell on the last day of 2022, then turn around and buy it back on the first trading day of 2023. If the capital gains are wiped out by the medical expenses, then all you're doing it resetting your costs to a higher amount, thereby saving the tax in the future. Of course, there's a slight risk if the stock spiked over that close/open period, but it seems like a low risk.

As always, not financial advice, just a paid actor, yada yada yada...

Gotta make sure to buy it back before P&D numbers come out... have to check the calendar!

 

[dhanson865]

Gotta make sure to buy it back before P&D numbers come out... have to check the calendar!

P&D numbers came out on Jan 2 last time (I wanted to say last year but it happened in 2022).

BTW that is a Sunday so day of week doesn't even help.

 

[wipster]

P&D numbers came out on Jan 2 last time (I wanted to say last year but it happened in 2022).

Yeah, since the next business day next year is on Monday January 3rd, I'll need to buy AH if i go that route.

 

[dhanson865]

Yeah, since the next business day next year is on Monday January 3rd, I'll need to buy AH if i go that route.

Mon Jan 3rd is 2022
Tue Jan 3rd is 2023.

Either way you might have to do your after hours trade.

 

[wipster]

Mon Jan 3rd is 2022
Tue Jan 3rd is 2023.

Either way you might have to do your after hours trade, I'm not sure if Monday Jan 2nd 2023 is a trading day or not.

You're right! Guess I need to take a how to read a calendar course!

 

[Speedr117]

Gotta make sure to buy it back before P&D numbers come out... have to check the calendar!

@wipster, not sure you saw the previous post from someone else, but the wash rule prevents this sadly.

I think the workaround would be to sell your shares and buy calls a month out that you would use to buy back your shares at a fixed price at the beginning of February. Calls are disparate enough from stocks that the wash rule should not be in effect (the IRS rule is fuzzy, mentioning not "substantially identical" assets). From a practical preservative, almost certain your brokerage won't flag it as a wash rule though. I'd consult your accountant first obviously (unless there's someone here that can chime in).

Again, not financial advice, only stayed at a Holiday Express, yada yada yada...

 

[CHGolferJim]

I'm in a somewhat unique situation, but I'm sure others have or will face it. This year I'm going to have a huge amount of medical expenses to write off and I was planning on selling some TSLA stock (long-term capital gain) to take advantage of that. This plan came before the stock went into the toilet however. Also, the Washington State legislature has now imposed a 7% capital gains tax upon us! And they're calling it an excise tax rather than an income tax, because imposing an income tax would require a vote by the people, which would probably get voted down (I would hope... there are a lot of Microsoft millionaires in this state). While I pretty sure it will be found to be unconstitutional, the courts have authorised the state to collect it in the interim (how?).

So while I was hoping TSLA would have at least started the pop by now, per @StarFoxisDown! it doesn't look like it will until January if then. So I'm in a quandary: sell Tesla stock at this low price to take advantage of the medical expenses or keep it until it pops and pay long-term capital gains taxes. I don't really need the money yet, but I hate to let that big write-off go to waste.

Any advice from all you learned folk will be appreciated!

Are you getting professional tax advise to do pro forma tax return calculations? Medical deductions are gradually phased out with rising income levels; also check if you can create a carryforward so you don’t have to sell TSLA at these price levels.

 

[wipster]

Are you getting professional tax advise to do pro forma tax return calculations? Medical deductions are phased out with rising income levels, and also check if you can create a carryforward so you don’t have to sell TSLA at these price levels.

I do my own taxes, have for as long as I've been paying taxes, but thanks for the suggestion, especially about the phase out. I'll be sure to check that out. The capital gains is the only thing that would substantially raise my income level so I'm glad you mentioned that. Hopefully I'll be able to map out the options prior to year-end.

Thanks @CHGolferJim !

 

[wipster]

@wipster, not sure you saw the previous post from someone else, but the wash rule prevents this sadly.

I think the workaround would be to sell your shares and buy calls a month out that you would use to buy back your shares at a fixed price at the beginning of February. Calls are disparate enough from stocks that the wash rule should not be in effect (the IRS rule is fuzzy, mentioning not "substantially identical" assets). From a practical preservative, almost certain your brokerage won't flag it as a wash rule though. I'd consult your accountant first obviously (unless there's someone here that can chime in).

Again, not financial advice, only stayed at a Holiday Express, yada yada yada...

Thanks @Speedr117, was wondering about that. Good advise, even if you stayed at a Motel 6!

 

[BornToFly]

Gotta make sure to buy it back before P&D numbers come out... have to check the calendar!

You will probably be able to buy more shares AFTER P&D comes out, and the SP tanks 10% because TSLA had 47% growth instead of 50%....