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Tax Optimization
It is a good idea to check where you are with your Capital Gains before the year ends. If you have been thinking about getting rid of some lossy positions, you may want to do so in a year where you have Capital Gains.
Neutralizing CG: Pick the long-held lossy positions to sell before year end as part of your strategy to neutralize your Capital Gains.
Neutralizing CG: Pick the long-held lossy positions to sell before year end as part of your strategy to neutralize your Capital Gains.
Net Capital Loss, say from a stock sale, can offset up to $3K in ordinary income as long as the position is not reacquired within 30 days (Wash Rule). Any excess loss is carried forward indefinitely.
Blog: Miscellaneous Tax Topics
Net Capital Loss, say from a stock sale, can offset up to $3K in ordinary income as long as the position is not reacquired within 30 days (Wash Rule). Any excess loss is carried forward indefinitely.
Blog: Miscellaneous Tax Topics
As elaborated in the Roth Conversion blog, it is best to do the conversion in smaller chunks over multiple years in order to limit the incremental taxable income a Roth Conversion generates.
Roth Conversion: Calculate how much extra income you can have and still be in the same marginal tax bracket. This could be the amount to reallocate from Pre-Tax to Post-Tax for this calendar year.
Roth Conversion: Calculate how much extra income you can have and still be in the same marginal tax bracket. This could be the amount to reallocate from Pre-Tax to Post-Tax for this calendar year.
A good time to do Roth Conversion is when the market is at a low point, such as during a recession or a market correction, because the ordinary income generated will be lower. Of course, the positions may need to be reestablished once the funds are in your Roth IRA so that the overall gain/loss remains unchanged.
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Neutralize Capital Gains before year end
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Perform Roth Conversion before year end
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Neutralize Capital Gains before year end
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Perform Roth Conversion before year end.
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