I want to sell stock at a profit and immediately buy it again

Yes, you can do that. The feds likes it when you do things that cause you to pay tax now rather than later. That's why the wash sale rule only applies to losses, not gains.

I don't think so.

I think this would be suspicious.

Agreed, but do I recall a time when this exact process was permitted? IIRC, it was to start a new holding period as well, when there was a 5 (?) year deal for stock holding.

This ring a bell for anyone?

Yup, a while ago when the super long term rates came into existence for a short while.

You could mark to market and recognize a deemed sale and restart the holding period in hopes of holding 5 years and then qualifying for the super long term 8/18% rates. And some folks did that, only to see the 12 month rates go to 0/15%, making the 8/18% not very appetizing.

The date for marking to market without technically selling was January 1 of that year, long long ago, and it no longer can be done.

It's my understanding that if the "Bush" tax cuts are not extended, those old rates (including the five-year 18% rate) come back into existence. And then those folks who did the deemed sales will be looking very smart. [If there are any stocks from that era that are showing a gain these days.]

Don EA in Upstate NY

Thanks, Don. I was just wondering about this the other day. I long ago gave up trying to keep track which of the changes made since 2000 that were initially subject to sunset were subsequently made permanent. With only thanks to Don and absolutely no disrespect to him intended, has anyone researched this enough to say it without hedging?

Phil Marti VITA/TCE Volunteer Clarksburg, MD

Not quite an official cite, but see

From The Tax Institute newsletter, explaining why the 8%/18% LTCG rates for qualified 5-yr assets are "coming back":

"The 8% and 18% rates were part of the 1998 Tax Reform Act and thus are not part of EGTRRA/JGTRRA sunset. They were trumped by the more favorable JGTRRA capital gain rates but will still be available when the

As it's written, I agree. But. Do you think there would be a simple sunset, or re-writing so '98 reform doesn't just kick back in 100%?

Selling to a spouse to recognize a loss is specifically prohibited by tax code, but that is not the same as your question.

What is the benefit of selling to your wife versus just selling and buying back yourself? You still pay two commissions (buying and selling) in either case.

Maybe his wife's broker has lower commissions?

That's unlikely in the current law. And doing anything like that in Washington these days is highly unlikely.

___ Stu

I think he was proposing a between-spouses "sale" while actually retaining the stock so there would be no commission to an actual broker.

I googled "sell stock without a broker", and it seems like this should be possible. As he said, you can't get away with this to recognize a loss, but I don't think the IRS would mind for a gain.

...

It doesn't seem like there would be the issue of trying to avoid taxes, granted. I don't know (and couldn't find in a _very_ short search) any rules specifically.

I'd wonder how it would/could be demonstrated it was actually a sale rather than attempt to mark to market if the shares are held in a brokerage account it would seem necessary for them to change the ownership of record. If were holding the shares physically it would be easier it would seem.

That's what I would recommend - get the certificates and sign them over to the "buyer."

___ Stu

This is generally more expensive than just buying and selling. Most discount brokers charge far more to issue a certificate or retitle it than their buy/sell commission because there is more work involved on their end.

Ira Smilovitz

Most discount brokers will do a transaction for $10 or less. I realize that it's fun to spin out hypotheticals but really, if it's not worth $20 to you to lock in the current tax rate on $56,000, I'd say forget about it.

R's, John