12-21-2012, 02:03 PM
If I understand it all correctly, it's something I think everyone should think about in their privately held stocks. Anything you have that's gone long term, you might want to sell it now and rebuy it, rolling all your profits back in.
Maybe an attempt at an example is in order... You bought 100 shares of stock at $50 and it's now a LT holding at a stock price of $100.
2012: 100 shares of stock @ $100 each = $10,000 minus $5,000 initial cost minus 15% tax = $4250 actual value
2013: 100 shares of stock @ $100 each = $10,000 minus $5,000 initial cost minus 30% tax = $3500 actual value
If the tax rate goes up to 30% (I don't think we know what it's going to move to yet, other than it's not gonna go down...) then by doing nothing, you would have just lost $750. By selling in 2012 and re-investing, you actually came out ahead even though you had to pay taxes and didn't actually end up with any cash in hand from it.
Maybe an attempt at an example is in order... You bought 100 shares of stock at $50 and it's now a LT holding at a stock price of $100.
2012: 100 shares of stock @ $100 each = $10,000 minus $5,000 initial cost minus 15% tax = $4250 actual value
2013: 100 shares of stock @ $100 each = $10,000 minus $5,000 initial cost minus 30% tax = $3500 actual value
If the tax rate goes up to 30% (I don't think we know what it's going to move to yet, other than it's not gonna go down...) then by doing nothing, you would have just lost $750. By selling in 2012 and re-investing, you actually came out ahead even though you had to pay taxes and didn't actually end up with any cash in hand from it.