LT Capital Gains

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n00b_to_investing
Posts: 67
Joined: Mon Feb 11, 2013 12:37 pm

LT Capital Gains

Post by n00b_to_investing »

I have a fairly diversified portfolio allocated across VTI/VXUS/BND ETFs (80/20, 30% intl, 20% cash for DCA). Outside this allocation, ~ 15% of my NV is in two internet mega corps (ESPP, RSU) fully vested sitting on low 6 figure LT capital gains. At some point I would like to sell them and re-allocate the proceeds my 3-fund portfolio. But pulling the trigger will result in significant LT capital gains taxes.

Looking for some options / suggestions.

If I were to sell, shall i put aside enough cash to cover tax liability or invest all the proceeds ?

Thanks in advance!
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Grandpaboys
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Location: Texas

Re: LT Capital Gains

Post by Grandpaboys »

If you are in the 15% tax bracket sell enough to keep you in that bracket each year and pay zero taxes.
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livesoft
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Joined: Thu Mar 01, 2007 7:00 pm

Re: LT Capital Gains

Post by livesoft »

Since you already have cash put aside that you are not investing, I don't quite understand the question. I suggest you just pay the tax right away to the US government.
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Bob's not my name
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Joined: Sun Nov 15, 2009 8:24 am

Re: LT Capital Gains

Post by Bob's not my name »

Grandpaboys wrote:If you are in the 15% tax bracket sell enough to keep you in that bracket each year and pay zero taxes.
OP is in the low end of the 33% bracket, subject to the ACA tax on investment income, probably subject to the AMT, and has a high state tax. Tax rate on LTCG is probably over 35%, and there's probably no tax benefit to spreading the sales over multiple years.

Appreciated shares can be donated to charity instead of cash. Appreciated shares can be gifted to the child so the child can liquidate a few thousand each year at the 0% federal rate, but this is a narrow pipe due to the kiddie tax limit.
mich_bogle
Posts: 85
Joined: Mon Jun 02, 2014 3:54 pm

Re: LT Capital Gains

Post by mich_bogle »

I'm going through a similar situation right now (although not in the 33% tax bracket which probably has its own wrinkles). The one thing I was not really aware of is the whole issue of 'estimated taxes'. Can't just set the money aside and wait til next year to pay it:
http://www.bogleheads.org/forum/viewtop ... 2&t=141773
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