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Personal Investments • with Spec ID, considerations for which LT shares to sell

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Here's a simple extreme edge case to consider with my comments - feel free to disagree:

I own 2000 shares of XYZ trading today at $101
I bought 1000 shares 20 years ago at $1 ( gain is $100 ps)
I bought 1000 shares 13 months ago at $100 ( gain is $1 ps)

Task 1.Capital Gain harvesting ONLY. My income is low enough this year so I can fit in an extra $1000 of CG at 0% tax rate
  • I could sell 10 old shares for $1010 with CG of $1000 and then use the $1010 to buy 10 shares back
  • I could sell 1000 newer shares for $101,000 with CG of $1000 and then use the $101,000 to buy 1000 shares back
My take - it makes no difference which shares I sell if all I am going to do is buy back all the shares - I still end up with 2000 shares.
Yes, but with the second option you now have more shares with a high cost basis, which puts you in a position to pay less CG tax when you need to raise a set amount of money later. For that reason it seems to make sense to always touch the shares with the highest CG last, regardless whether it's for gain harvesting or raising cash.

Statistics: Posted by Eno Deb — Fri Dec 13, 2024 11:42 am — Replies 14 — Views 814



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