"Ron Peterson" <
ronpet...@comcast.net> wrote in message
news:67114a3b-d4f7-404f...@googlegroups.com...
> Suppose one has $300,000 in taxable gains consisting of stock held a long
> time.
>
> Realizing the entire $300,000 would result in a large tax bill and higher
> tax prepayments in the current and the following year as well a higher tax
> rate and other charges such as Medicare.
It need not result in high estimated tax payments in either the current or
the subsequent year. You can use the safe harbor provision for the current
year, and you can just make sure you pay enough estimates in the subsequent
year to meet the estimated tax requirement - don't use the safe harbor of
last year's income levels for the subsequent year.
The 3.8% Obama tax, may or may not kick in, depending on your overall income
level. If you are above the threshold, realizing the entire gain in one
year wouldn't matter. If not, you could consider spreading it out to remain
below that threshold.
I don't know how the AMT or phase outs are affected - they made the damn tax
code so complex tax planning is pretty difficult. You might want to try
different scenarios using a tax preparation program.
>
> So would it be better to only realize $150,000 or $100,000 of capital
> gains for the current taxable year?
>
> There is the option trying to postpone the capital gains as long as
> possible at the expense of holding stocks that don't show much future
> prospects.
>
If you wait until you die, the entire taxable capital gain gets wiped out by
a stepped up basis. Of course, you can't spend the money that way, but your
heirs and devisees can. Something to consider if you have one foot on a
banana peel.