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Capital Gains

With the market as such I have some losses I plan to book before the end of the year. I also plan to ofsett the losses with gains I have with other stocks. These are the Questions:

  1. If I sell the stock that has cap gains and buy the same right back, will IRS accept the transaction as a cap gain transaction, or are there any "wash sale rules" or such for gains?

  1. Is there any other way to just move up the basis of the stock, pay cap gain tax for the difference and use the paper gain to ofsett the other losses? Actualy I am looking to see if there is a way "bok" the gain without messing with the game of buying/selling it?

Any good ideas are appreciated.

Tkx, Alex

Reply to
alex
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In order, yes and no. While this may seem a great idea on the surface, scratch a tad below before you decide to just willy-nilly reset basis and holding period. You don't mention how much paper loss you're planning on recognizing. Remember that you can apply $3,000 to ordinary income, which is taxed at a higher rate than long-term cap gains. Hold your winners long enough and your heirs can inherit them tax-free.

Also, don't let the tax tail wag the investment dog. Are you selling because these are stinkers that no longer belong in your portfolio or just to harvest tax losses? What you might be looking at, from an investment perspective, is an opportunity to buy cheap rather than an opportunity to recognize losses.

No

Reply to
Phil Marti

Lets say I have 150,000 in interest and dividends, and a lot of capital losses. I also have some very hefty deductions, so I am well into AMT. Do I still get to apply the $3,000 to ordinary income, or is that lost into the black hole of AMT?

Reply to
jack

Yes, if you had a loss on the trade, there are special rules. The thing you put in quotes will make an excellent search group.

Yes. No problem taking a gain, and then re-buying. It's is only a loss that can make a wash sale.

If taking a loss, you could stay out of the stock for 31 days or more. Then buying back is not a wash sale.

Reply to
DF2

In some tricky situations, such as selling stock acquired through ISO exercise or sale of depreciated property that flows to schedule D, you might have a different Schedule D for regular tax than for AMT.

But you have not told us anything that would hint there are going to be different Schedules D needed.

So assuming you will use the same schedule D for regular tax and AMT, you will apply the same ($3000) to form 1040 line 13, and no schedule D adjustment on the AMT Form 6251.

Reply to
Arthur Kamlet

Thanks for the reply. Following is additional background:

  1. The unrealized losses are more than 300,000 and the unrealized gains (short and very few long) are double than the losses. I can "save" enough of them to use the 3000 against ordinary income.
  2. The cap gains are mostly in one stock that was distributed to me as zero basis and can not be stepped up if is an inheritence distribution.

Would the added info change anything?

Reply to
alex

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