Tax Strategy - Should I selll stock and buy it back if I'm in the 10% bracket?

Question

I have some stock that I have some gains on. Most years I'm in the 25% bracket. This year I might stay under the 10% level. What I'm wondering is if I'd benefit from taking the gains say on Dec 31st (just in case unexpecected earnings). that should let me get special tax treatment on the gains. Around

5-6k. If I really want the stock back and don't mind missing out on any potential rally's I could buy it back and I wouldn't mind having to wait the washsale period if it even matters in this case. Off Topic I have around 200k in a Traditional IRA, no anticipated pensions, and I'm 55. Would it make sense to roll a few bucks into a roth If I can stay under 15% on the fed side? - thanks!

JoeTaxpayer · Accepted Answer

There is no wash to sell at a gain and buy back immediately to raise your cost basis.Yes, if you are in the 10% bracket, converting to top off the 10% is a great idea.

Phil Marti · Answer

Don't forget any effect on your state return. In every state I'm familiar with the income will carry over to your state return and be taxed at your marginal rate.

Sounds like a good idea. Just remember that you have to find the money to pay the tax from other than retirement accounts. Also, don't worry if it turns out you converted too much. You have until the following October 15 to recharacterize the excess back to your traditional IRA and get back in the 15% bracket.

Phil Marti VITA/TCE Volunteer Clarksburg, MD

Tax Strategy - Should I selll stock and buy it back if I'm in the 10% bracket?

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