Capital Gains Harvesting - Lots with Largest or Smallest Gains

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PalmQueen
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Capital Gains Harvesting - Lots with Largest or Smallest Gains

Post by PalmQueen » Tue Dec 31, 2019 12:45 am

I've been gradually shifting investments in my taxable account toward a 3-fund portfolio by selling legacy funds with losses or small gains. The early decisions were easy - just sell the losers and enough of the moderate performers to zero-out capital gains.

Now it's getting trickier because I'm down to the winners, with healthy capital gains. They're not terrible investments. Before I found this forum, they were my super stars. For a while I thought I would just continue to hold them "till death us do part".

Now I'm wondering if there would be an advantage to selling some of the shares to reset the cost basis.

If so, should I sell the lots with the lowest or highest cost basis?

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Re: Capital Gains Harvesting - Lots with Largest or Smallest Gains

Post by warner25 » Tue Dec 31, 2019 12:57 am

There aren't many of us who are usually in a position to tax gain harvest, but I've done it each of the last three years now. My strategy is to sell my most appreciated share lots for the purpose of gain harvesting up to the 0% capital gains limit. That way, I'm left with my least appreciated shares in the event that I later need to sell taxable shares to raise cash for something (an emergency or major purchase); I can raise the most cash with the lowest tax impact.

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Re: Capital Gains Harvesting - Lots with Largest or Smallest Gains

Post by CalculatedRisk » Tue Dec 31, 2019 3:14 am

warner25 wrote:
Tue Dec 31, 2019 12:57 am
There aren't many of us who are usually in a position to tax gain harvest, but I've done it each of the last three years now. My strategy is to sell my most appreciated share lots for the purpose of gain harvesting up to the 0% capital gains limit. That way, I'm left with my least appreciated shares in the event that I later need to sell taxable shares to raise cash for something (an emergency or major purchase); I can raise the most cash with the lowest tax impact.
Would it work the other way around, too? Harvest more shares (with least amount of gains) so that if you need to raise cash, those shares have near zero appreciation. This would provide more opportunities for tax loss harvesting, as well. I’d have to run example scenarios to see which is better.

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Re: Capital Gains Harvesting - Lots with Largest or Smallest Gains

Post by warner25 » Tue Dec 31, 2019 3:53 am

Good point. I guess it depends when "later" is. Recently harvested shares might have minimal appreciation, but the gains would be short-term if I needed the cash within one year.

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Re: Capital Gains Harvesting - Lots with Largest or Smallest Gains

Post by livesoft » Tue Dec 31, 2019 5:27 am

We give away the shares with the largest gains to our Donor-Advised Fund (DAF). We don't tax-gain harvest yet because we are still nursing carryover losses from more than 10 years ago. When we sell shares to pay expenses, we sell the shares with the least gains percentage-wise in order to avoid offsetting our carryover losses as much as possible. Since we are not buying new shares anymore in our taxable account, I don't think we will tax-loss harvest anymore losses either.

There was a time when we only sold shares with short-term gains, but we didn't have any net realized gains because of the previous tax-loss harvesting that we did. We haven't had to pay any capital gains taxes since I think 1999.

Another idea is to sell the lots with the fewest shares each in order to "clean up" the presentation of lots in your account. If you have many small lots, then reducing that list to a smaller number of larger lots may be pleasing to you.
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Re: Capital Gains Harvesting - Lots with Largest or Smallest Gains

Post by Skeeter1 » Tue Dec 31, 2019 9:47 am

OP
Ironically I am in the exact same position as you and struggle with this as well. I was able to "clean up" a horribly managed portfolio of 26 funds after firing my advisor and am now left with the funds in my taxable space with large capital gains.
I agree with livesoft that for me I am slowly selling my smallest lots. My only twist is instead of fewest shares, I am converting my smallest $$ amount. It does give me satisfaction to reducing the amount of total funds in my taxable :happy
All the best

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Re: Capital Gains Harvesting - Lots with Largest or Smallest Gains

Post by JimInIllinois » Tue Dec 31, 2019 10:08 am

Since your goal is to move your assets to a 3-fund portfolio, you should sell the lots with the highest basis (i.e., the lowest gains) since this allows you to move the most assets to your preferred portfolio with the least taxes.

As for the low-basis, high-gain shares, consider donating them to charity (in place of your other giving) or just plan to hold them forever and let your heirs enjoy the step-up in basis.

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Re: Capital Gains Harvesting - Lots with Largest or Smallest Gains

Post by PalmQueen » Tue Dec 31, 2019 11:25 am

Thank you for the thoughtful responses. All sound like reasonable options.

There's a third approach, which initially didn't appeal to me, but might make sense.

Fidelity has this holding set to use the average cost basis. The theory behind that is that it enables one to spread out the capital gains evenly across all sales. I was planning to change this so I can strategically pick and choose the individual lots. (I realize it's an all-or-nothing decision. Once I start selling, will have to use either average or individual lot cost basis for all future transactions of this fund.)

Now that I'm looking at capital gains ranging from 25% to 262% with an average of 136%, maybe spreading gains evenly isn't such a bad idea.
Could that actually be the strategic play?

(As to the capital gains, I too wish I could say the same for all my investments. Believe me, I've had more than my share of duds with the carry-forward capital losses on the books to prove it. Just would prefer to use them strategically as well. 8-))

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Re: Capital Gains Harvesting - Lots with Largest or Smallest Gains

Post by livesoft » Tue Dec 31, 2019 11:27 am

PalmQueen wrote:
Tue Dec 31, 2019 11:25 am
Now that I'm looking at capital gains ranging from 25% to 262% with an average of 136%, maybe spreading gains evenly isn't such a bad idea.
Could that actually be the strategic play?
That would certainly cost me a lot more in taxes than I actually have to pay, so I myself would consider that a terrible idea.
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Re: Capital Gains Harvesting - Lots with Largest or Smallest Gains

Post by PalmQueen » Tue Dec 31, 2019 2:40 pm

livesoft wrote:
Tue Dec 31, 2019 11:27 am
PalmQueen wrote:
Tue Dec 31, 2019 11:25 am
Now that I'm looking at capital gains ranging from 25% to 262% with an average of 136%, maybe spreading gains evenly isn't such a bad idea.
Could that actually be the strategic play?
That would certainly cost me a lot more in taxes than I actually have to pay, so I myself would consider that a terrible idea.
Thanks livesoft for the quick - and decisive - reply! Now I can follow my instincts and switch over to individual cost basis lots w/o hesitation.

There doesn't seem to be an advantage for me to reset the basis on lower cost lots so once I decide how many to reposition, I'll start selling the higher cost basis lots. Many likely will remain for donation and/or heirs.

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Re: Capital Gains Harvesting - Lots with Largest or Smallest Gains

Post by the way » Tue Dec 31, 2019 3:53 pm

PalmQueen wrote:
Tue Dec 31, 2019 2:40 pm
livesoft wrote:
Tue Dec 31, 2019 11:27 am
PalmQueen wrote:
Tue Dec 31, 2019 11:25 am
Now that I'm looking at capital gains ranging from 25% to 262% with an average of 136%, maybe spreading gains evenly isn't such a bad idea.
Could that actually be the strategic play?
That would certainly cost me a lot more in taxes than I actually have to pay, so I myself would consider that a terrible idea.
Thanks livesoft for the quick - and decisive - reply! Now I can follow my instincts and switch over to individual cost basis lots w/o hesitation.

There doesn't seem to be an advantage for me to reset the basis on lower cost lots so once I decide how many to reposition, I'll start selling the higher cost basis lots. Many likely will remain for donation and/or heirs.
Here's a concocted case where avg basis helps: Say you have 1000 shares held long term with an unrealized gain of 20k and also 1000 shares held short term with an unrealized gain of 10k. An emergency has come up and you need to sell 1000 shares today to raise cash. You are in the 35% + 3.8% bracket, so the STCG would cost you $3880 in taxes while the LTCG would cost you $3760 in taxes. But if you change it to average cost, selling 1000 shares would automatically be FIFO, so you only have LTCG of 15k for taxes of only $2820.

In essence, you've pushed off 5k of gains into the 2nd batch, which will eventually turn LT as well (hopefully before you need to sell it).

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Re: Capital Gains Harvesting - Lots with Largest or Smallest Gains

Post by dcabler » Tue Dec 31, 2019 5:56 pm

PalmQueen wrote:
Tue Dec 31, 2019 12:45 am
I've been gradually shifting investments in my taxable account toward a 3-fund portfolio by selling legacy funds with losses or small gains. The early decisions were easy - just sell the losers and enough of the moderate performers to zero-out capital gains.

Now it's getting trickier because I'm down to the winners, with healthy capital gains. They're not terrible investments. Before I found this forum, they were my super stars. For a while I thought I would just continue to hold them "till death us do part".

Now I'm wondering if there would be an advantage to selling some of the shares to reset the cost basis.

If so, should I sell the lots with the lowest or highest cost basis?
Similar here. I now have 1 fund remaining that isn't an index fund and represents <8% of my total portfolio. Been directing div/cap gains elsewhere for several years now, but that can never make it completely go away. Current plan is to wait until I'm retired and (hopefully) in a lower overall bracket and then start selling appreciated shares over time, unless of course a TLH opportunity presents itself.

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Re: Capital Gains Harvesting - Lots with Largest or Smallest Gains

Post by grabiner » Tue Dec 31, 2019 9:42 pm

It is usually better to sell the shares with lower gains, whether you are harvesting or not.

If you are not selling to harvest gains, but to get rid of a fund, selling shares with lower gains allows you to sell more shares, and get rid of more of the fund.

If you are selling just to harvest gains, say that you have 500 shares bought for $80, and 1000 shares bought for $90, the shares are worth $100, and you want to take a $10K gain. You can sell either lot, and re-buy at $100.

If the price drops to $95 next year, you will benefit by selling the $80 lot now because you will have 1000 shares rather than 500 shares to sell for a tax loss harvest of $5 per share.

If the price rises, and you need to sell to raise money, you will have an equal capital gain either way if you sell 500 or fewer shares, but a smaller capital gain if you sell more than 500 shares if you have sold the $80 lot.

And if you decide to donate stock to charity, you will eliminate more capital gains if you keep the $80 lot and donate part of it later than if you keep the $90 lot and donate an equal number of shares.
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Re: Capital Gains Harvesting - Lots with Largest or Smallest Gains

Post by PalmQueen » Wed Jan 01, 2020 4:56 pm

the way wrote:
Tue Dec 31, 2019 3:53 pm

Here's a concocted case where avg basis helps: Say you have 1000 shares held long term with an unrealized gain of 20k and also 1000 shares held short term with an unrealized gain of 10k. An emergency has come up and you need to sell 1000 shares today to raise cash. You are in the 35% + 3.8% bracket, so the STCG would cost you $3880 in taxes while the LTCG would cost you $3760 in taxes. But if you change it to average cost, selling 1000 shares would automatically be FIFO, so you only have LTCG of 15k for taxes of only $2820.

In essence, you've pushed off 5k of gains into the 2nd batch, which will eventually turn LT as well (hopefully before you need to sell it).
Thank you the way for the well designed scenario to visualize this concept. It makes total sense and a good use of average cost basis.

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Re: Capital Gains Harvesting - Lots with Largest or Smallest Gains

Post by PalmQueen » Wed Jan 01, 2020 5:04 pm

grabiner wrote:
Tue Dec 31, 2019 9:42 pm
It is usually better to sell the shares with lower gains, whether you are harvesting or not.

If you are not selling to harvest gains, but to get rid of a fund, selling shares with lower gains allows you to sell more shares, and get rid of more of the fund.

If you are selling just to harvest gains, say that you have 500 shares bought for $80, and 1000 shares bought for $90, the shares are worth $100, and you want to take a $10K gain. You can sell either lot, and re-buy at $100.

If the price drops to $95 next year, you will benefit by selling the $80 lot now because you will have 1000 shares rather than 500 shares to sell for a tax loss harvest of $5 per share.

If the price rises, and you need to sell to raise money, you will have an equal capital gain either way if you sell 500 or fewer shares, but a smaller capital gain if you sell more than 500 shares if you have sold the $80 lot.

And if you decide to donate stock to charity, you will eliminate more capital gains if you keep the $80 lot and donate part of it later than if you keep the $90 lot and donate an equal number of shares.
Excellent examples grabiner. I've focused on dollar amounts, but you've shown how it's smarter to look at it as number of shares. I especially appreciate your last example of donating the shares with higher gains. Thank you!

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Re: Capital Gains Harvesting - Lots with Largest or Smallest Gains

Post by Lookingforanswers » Wed Jan 01, 2020 5:05 pm

One more small suggestion that can help you clean up your portfolio: If, when you were investing these funds, you were reinvesting dividends and capital gains, your account might be cluttered with lots of small lots. These are good lots to donate to a Donor-Advised Funds (DAF) -- you can get a lot of clutter out of your brokerage account in funds you no longer will buy in the future. It may not really make a big dent in the overall position you are trying to change but it helps you get focused on the lots you are still trying to sell off over the time frame you have in mind.

(Somehow has also already mentioned the notion of saving the lots with biggest gains to donate to a DAF -- I just wanted to add the idea of reducing clutter if that's another issue with these old funds. You can fund your DAF with a combination of lots that have big gains with a a bunch of little lots you just want to get rid of, if you have them).

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Re: Capital Gains Harvesting - Lots with Largest or Smallest Gains

Post by PalmQueen » Wed Jan 01, 2020 5:33 pm

Lookingforanswers wrote:
Wed Jan 01, 2020 5:05 pm
One more small suggestion that can help you clean up your portfolio: If, when you were investing these funds, you were reinvesting dividends and capital gains, your account might be cluttered with lots of small lots. These are good lots to donate to a Donor-Advised Funds (DAF) -- you can get a lot of clutter out of your brokerage account in funds you no longer will buy in the future. It may not really make a big dent in the overall position you are trying to change but it helps you get focused on the lots you are still trying to sell off over the time frame you have in mind.

(Somehow has also already mentioned the notion of saving the lots with biggest gains to donate to a DAF -- I just wanted to add the idea of reducing clutter if that's another issue with these old funds. You can fund your DAF with a combination of lots that have big gains with a a bunch of little lots you just want to get rid of, if you have them).
Good point Lookingforanswers. Dividends and capital gains were reinvested for years so you assume correctly the sheer number of small lots is a bit overwhelming and yes, distracting. Thanks!

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Re: Capital Gains Harvesting - Lots with Largest or Smallest Gains

Post by cherijoh » Wed Jan 01, 2020 6:05 pm

PalmQueen wrote:
Tue Dec 31, 2019 12:45 am
I've been gradually shifting investments in my taxable account toward a 3-fund portfolio by selling legacy funds with losses or small gains. The early decisions were easy - just sell the losers and enough of the moderate performers to zero-out capital gains.

Now it's getting trickier because I'm down to the winners, with healthy capital gains. They're not terrible investments. Before I found this forum, they were my super stars. For a while I thought I would just continue to hold them "till death us do part".

Now I'm wondering if there would be an advantage to selling some of the shares to reset the cost basis.

If so, should I sell the lots with the lowest or highest cost basis?
I don't see any point in repurchasing these funds to reset the cost basis. Why are you second guessing yourself about switching to indexes? You don't owe the funds any loyalty just because they were your winners in the past. :wink: I would focus on selling them to further clean up your portfolio.

I had some legacy funds from before I switched to index funds. As suggested in this current thread, I had discontinued reinvesting dividends and capital gains distributions. Those plus new investment money were going into the index funds. But I didn't want to generate the capital gains by selling my remaining shares in the legacy funds. I finally decided to sell out the rest of my position during the Great Recession when the capital gains were reduced dramatically. I turned around and invested the funds in either TSM or Total International depending on the type of fund - basically purchasing the benchmark for the funds I was selling. So I wasn't concerned about selling "low". They recovered nicely along with the stock market and I have a much simpler portfolio and no more pesky unexpected capital gains distributions in December.

Had I been aware of Donor Advised Funds (DAF), I probably would have gone that route and funded several years of charitable giving with my appreciated shares. As it was, I opened a DAF in 2017 (the year before I retired) to capture the most bang for my charitable giving as I expected to drop to a lower marginal tax bracket after retirement in 2018. (I donated some of the low-cost-basis shares in the index funds that I had purchased when I sold my legacy shares).

In light of the new tax law that was announced in Dec 2017, setting up and funding the DAF seemed very prescient. Last year I took the standard deduction for the first time in at least 25 years. With no new charitable donations (I did distribute money out of my DAF as grants), my actual deductions for state taxes and property taxes fell well below the new larger standard deduction.

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Re: Capital Gains Harvesting - Lots with Largest or Smallest Gains

Post by PalmQueen » Wed Jan 01, 2020 11:55 pm

cherijoh wrote:
Wed Jan 01, 2020 6:05 pm

I don't see any point in repurchasing these funds to reset the cost basis. Why are you second guessing yourself about switching to indexes? You don't owe the funds any loyalty just because they were your winners in the past. :wink: I would focus on selling them to further clean up your portfolio.
You're right cherijoh that doesn't make sense. The wording in my initial post could lead one to believe my intent is to sell then repurchase the same mutual funds. I'm actually switching to indexes as you suggest. Since there's considerable overlap in the top holdings, it feels like I'm essentially buying the same companies, just in a different wrapper at a higher cost basis.

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Re: Capital Gains Harvesting - Lots with Largest or Smallest Gains

Post by grabiner » Thu Jan 02, 2020 12:31 am

PalmQueen wrote:
Wed Jan 01, 2020 11:55 pm
cherijoh wrote:
Wed Jan 01, 2020 6:05 pm

I don't see any point in repurchasing these funds to reset the cost basis. Why are you second guessing yourself about switching to indexes? You don't owe the funds any loyalty just because they were your winners in the past. :wink: I would focus on selling them to further clean up your portfolio.
You're right cherijoh that doesn't make sense. The wording in my initial post could lead one to believe my intent is to sell then repurchase the same mutual funds. I'm actually switching to indexes as you suggest. Since there's considerable overlap in the top holdings, it feels like I'm essentially buying the same companies, just in a different wrapper at a higher cost basis.
And whether this is worth doing depends on the difference in expenses and tax costs, and on how long you will keep the funds before you sell them to raise the money. See Paying a tax cost to switch funds on the wiki.
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Re: Capital Gains Harvesting - Lots with Largest or Smallest Gains

Post by JoinToday » Thu Jan 02, 2020 3:34 am

Just RIP THE BANDAGE OFF!

I was faced with something similar (but probably worse than you). I bought a bunch of stock in the 1980's and in all honesty, after a year or two I had close to zero interest in following the stocks. I couldn't sell the [deleted] things because of the taxes I would have to pay. In probably 2006 or 2007, the portfolio had increased by a factor of 6 (increase of 500%), and due to acquisitions, mergers, spinning off companies, etc, I didn't even recognize some of the names of companies I owned stock in.

I sat down & saw most were around an all time high, or within a few % of the high. I bit the bullet, and sold them all. And it felt good, like a giant weight off of my shoulders.

Tax time was a complete mess. I followed my broker when he switched firms, and then he retired. I moved the shares to Vanguard. Needless to say, I had no clue what the cost basis was. I spent a lot of time back out a decent estimate of the cost basis from current price, splits, spin-offs, mergers, etc. Lesson learned: never buy individual stocks.

The stock market is at or near an all time high, with remarkable gains in the last 10 years, and 2019 in particular. Would you fell better if the stock market dropped 25% and this reduced the tax you pay? [OT comment removed].

I vote for selling everything now, assuming the penalty is only 15% LTCG tax. 2 weeks ago I might have said to split it between 2019 and beginning 2020, but 2019 is in the rear view mirror.

[Edits by moderator oldcomputerguy]
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Re: Capital Gains Harvesting - Lots with Largest or Smallest Gains

Post by Wiggums » Thu Jan 02, 2020 3:50 am

grabiner wrote:
Tue Dec 31, 2019 9:42 pm
It is usually better to sell the shares with lower gains, whether you are harvesting or not.

If you are not selling to harvest gains, but to get rid of a fund, selling shares with lower gains allows you to sell more shares, and get rid of more of the fund.

If you are selling just to harvest gains, say that you have 500 shares bought for $80, and 1000 shares bought for $90, the shares are worth $100, and you want to take a $10K gain. You can sell either lot, and re-buy at $100.

If the price drops to $95 next year, you will benefit by selling the $80 lot now because you will have 1000 shares rather than 500 shares to sell for a tax loss harvest of $5 per share.

If the price rises, and you need to sell to raise money, you will have an equal capital gain either way if you sell 500 or fewer shares, but a smaller capital gain if you sell more than 500 shares if you have sold the $80 lot.

And if you decide to donate stock to charity, you will eliminate more capital gains if you keep the $80 lot and donate part of it later than if you keep the $90 lot and donate an equal number of shares.
+1

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Re: Capital Gains Harvesting - Lots with Largest or Smallest Gains

Post by cherijoh » Thu Jan 02, 2020 8:17 am

PalmQueen wrote:
Wed Jan 01, 2020 11:55 pm
cherijoh wrote:
Wed Jan 01, 2020 6:05 pm

I don't see any point in repurchasing these funds to reset the cost basis. Why are you second guessing yourself about switching to indexes? You don't owe the funds any loyalty just because they were your winners in the past. :wink: I would focus on selling them to further clean up your portfolio.
You're right cherijoh that doesn't make sense. The wording in my initial post could lead one to believe my intent is to sell then repurchase the same mutual funds. I'm actually switching to indexes as you suggest. Since there's considerable overlap in the top holdings, it feels like I'm essentially buying the same companies, just in a different wrapper at a higher cost basis.
Okay, I think I was thrown off by the use of "reset the cost basis" which made me think you were keeping the same funds.

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Re: Capital Gains Harvesting - Lots with Largest or Smallest Gains

Post by PalmQueen » Thu Jan 02, 2020 5:26 pm

grabiner wrote:
Thu Jan 02, 2020 12:31 am
And whether this is worth doing depends on the difference in expenses and tax costs, and on how long you will keep the funds before you sell them to raise the money. See Paying a tax cost to switch funds on the wiki.
The scenario in the worksheet is a great match for my situation. For the first 16 years, keeping the fund results in higher after tax value. At year 17, returns for switching out of the fund are 0.53% better and at year 30 they're 2.88% better.

Thank you grabiner for the link to the excellent Wiki resource! Many thanks to the team who developed and shared this valuable tool!

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Re: Capital Gains Harvesting - Lots with Largest or Smallest Gains

Post by PalmQueen » Thu Jan 02, 2020 5:35 pm

JoinToday wrote:
Thu Jan 02, 2020 3:34 am
Just RIP THE BANDAGE OFF!

I was faced with something similar (but probably worse than you). I bought a bunch of stock in the 1980's and in all honesty, after a year or two I had close to zero interest in following the stocks. I couldn't sell the things because of the taxes I would have to pay. In probably 2006 or 2007, the portfolio had increased by a factor of 6 (increase of 500%), and due to acquisitions, mergers, spinning off companies, etc, I didn't even recognize some of the names of companies I owned stock in.

Tax time was a complete mess. I followed my broker when he switched firms, and then he retired. I moved the shares to Vanguard. Needless to say, I had no clue what the cost basis was. I spent a lot of time back out a decent estimate of the cost basis from current price, splits, spin-offs, mergers, etc. Lesson learned: never buy individual stocks.
Wow JoinToday! That's quite an adventure. Thanks for sharing. To add insult to injury I expect you were working with paper statements back then.

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Re: Capital Gains Harvesting - Lots with Largest or Smallest Gains

Post by grabiner » Thu Jan 02, 2020 9:33 pm

PalmQueen wrote:
Thu Jan 02, 2020 5:26 pm
grabiner wrote:
Thu Jan 02, 2020 12:31 am
And whether this is worth doing depends on the difference in expenses and tax costs, and on how long you will keep the funds before you sell them to raise the money. See Paying a tax cost to switch funds on the wiki.
The scenario in the worksheet is a great match for my situation. For the first 16 years, keeping the fund results in higher after tax value. At year 17, returns for switching out of the fund are 0.53% better and at year 30 they're 2.88% better.
Since you have multiple lots, run the spreadsheet separately for each lot. You might find it better to sell lots for a 20% capital gain, and keep lots for a 40% capital gain.

And if you never want to sell those high-gain lots, they are good candidates for donating to charity. I do this to get rid of an old fund that is slightly inferior to my current holdings but would have a big tax bill if I sold it. (When I decided to no longer hold the fund, I sold the shares with losses or trivial gains.)
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Re: Capital Gains Harvesting - Lots with Largest or Smallest Gains

Post by PalmQueen » Fri Jan 03, 2020 5:33 pm

grabiner wrote:
Thu Jan 02, 2020 9:33 pm
PalmQueen wrote:
Thu Jan 02, 2020 5:26 pm
grabiner wrote:
Thu Jan 02, 2020 12:31 am
And whether this is worth doing depends on the difference in expenses and tax costs, and on how long you will keep the funds before you sell them to raise the money. See Paying a tax cost to switch funds on the wiki.
The scenario in the worksheet is a great match for my situation. For the first 16 years, keeping the fund results in higher after tax value. At year 17, returns for switching out of the fund are 0.53% better and at year 30 they're 2.88% better.
Since you have multiple lots, run the spreadsheet separately for each lot. You might find it better to sell lots for a 20% capital gain, and keep lots for a 40% capital gain.

And if you never want to sell those high-gain lots, they are good candidates for donating to charity. I do this to get rid of an old fund that is slightly inferior to my current holdings but would have a big tax bill if I sold it. (When I decided to no longer hold the fund, I sold the shares with losses or trivial gains.)
Indeed, running the spreadsheet on different lots is enlightening. For the lot with the least appreciation (28%) switching comes out ahead at year 1 with 0.19% better after-tax returns, increasing to 8.13% better at year 30. Thank you for the advice grabiner. I'm going to run more scenarios on more lots and can take decisions based on fairly realistic outcomes. (Which do happen to line up with the general advice to sell least appreciated lots first.)

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