Monster tax bill question

[Rein1987]

My DH and I got married last year. Because I graduated in mid 2013, I'm very confident that my full year salary in 2014 is much higher than 2013 so we did not change the tax withhold (still withhold at single rate), with the hope that we will hit the safe harbor. Now the tax time comes, and we were shocked by the amount of tax we owe to IRS: almost $40k !!! Marriage tax penalty sucks...

So I have three questions here:

1. This $40k is calculated by turbotax. I guess this is not a common number that we should owe to IRS. Should we hire an account to do the tax again? Maybe we can reduce the tax bill a little, or maybe there are some other troubles with this large tax bill...

2. I guess I deserve some face punch here....so my husband and I just bought a house last month, with only $30k liquid emergency fund. I did not do a very good calculation on the tax bill at that time that I only expect something like $10k. Also, we do not spend much. Therefore, we are very aggressive putting all our money in retirement account and investment. In other words, we may not have enough money to cover this tax bill by April 15. Is there a way to ask for extension? Or should we use HELOC to pay the bill (4% interest)?

3. I think I should learn a lesson here, to do tax planning beforehand. However, if we do need to pay $40k more in tax, which means $3k more every month, or something more than $1500 every paycheck...My current paycheck with all deduction (401k, health insurance, tax) is only $1900..Does that mean my salary will go down to $400 every paycheck? This does not make much sense to me. Well, this year we have a house with mortgage and property tax, so maybe the tax bill should be better. But, we no longer have safe harbor, so how should I estimate how much more tax I should withhold?

[Murse]

First thing is you sound unsure, how much did you two gross?

[Exflyboy]

This sounds WAAY out of whack to me. As Murse asked what is your combined gross?

How much of that are you contributing to your 401k's (that gets removed from your gross)

Just by getting married doesn't suddenly increase your yearly tax bill by $40k.. something is way off.

[jmusic]

HOLY CRAP!  $40K is crazy territory.  I'm sure there's a few things that could cause it, but they're pretty unusual.  Did you sell a fully depreciated rental property? Is your combined income over $160k?  Did you fill in all the income tax withholdings on your W2s?

FWIW I did calculate the marriage tax penalty for me and my wife and it came out to $4K (because of my tIRA and her itemized deductions).  Because of that, we waited to get married until this year. 

[Rein1987]

First thing is you sound unsure, how much did you two gross?

Our combined gross is between 400k to 500k last year..about in the highest tax bracket...If we are single, our gross are in 28% and 33% bracket (I do not have the exact number at hand now). We did not finish our tax filing yet, so we are not sure about our tax rate in state, but turbo tax estimate a total (state + federal) of 40k tax we need to pay.

We maximized our 401k last year...but I made a mistake so about 2k of my 401k goes to roth 401k instead of pre-tax 401k. We tithe to church. The year before our marriage, we both got tax refund.

[Rein1987]

HOLY CRAP!  $40K is crazy territory.  I'm sure there's a few things that could cause it, but they're pretty unusual.  Did you sell a fully depreciated rental property? Is your combined income over $160k?  Did you fill in all the income tax withholdings on your W2s?

FWIW I did calculate the marriage tax penalty for me and my wife and it came out to $4K (because of my tIRA and her itemized deductions).  Because of that, we waited to get married until this year.

We only have W2 and some stock capital gain. Most of our gross come from W2. We did not change our withhold after marriage because of the safe harbor and we want to withhold as little as possible.

We do not have rental property or so...

I also sold all my stock with capital loss last december.

[Exflyboy]

The smart thing as you said would be to have planned your witholding when you got married.

With a $400 to $500k salary you are basically rolling in money so spending a couple of hundred bucks with a CPA upfront would be trivial. Although a $40k bill will suck its still pretty small beans.

Personally I'd hire a CPA.. I do and the most we ever earned was a third of what you make, but with rental proprties and a farm business I found the guy always saved us more in tax than what he cost us.

[Exflyboy]

The smart thing as you said would be to have planned your witholding when you got married.

I don't think the complaint is with the amount owing, but rather with the fact that getting married increased their taxes. Unfortunately, that's just a well-known part of US tax law for high-income wage earners. The easiest solution is divorce.

Oh I totally agree its not fair, it shouldn't be this way.

[JLee]

My DH and I got married last year. Because I graduated in mid 2013, I'm very confident that my full year salary in 2014 is much higher than 2013 so we did not change the tax withhold (still withhold at single rate), with the hope that we will hit the safe harbor. Now the tax time comes, and we were shocked by the amount of tax we owe to IRS: almost $40k !!! Marriage tax penalty sucks...

So I have three questions here:

1. This $40k is calculated by turbotax. I guess this is not a common number that we should owe to IRS. Should we hire an account to do the tax again? Maybe we can reduce the tax bill a little, or maybe there are some other troubles with this large tax bill...

2. I guess I deserve some face punch here....so my husband and I just bought a house last month, with only $30k liquid emergency fund. I did not do a very good calculation on the tax bill at that time that I only expect something like $10k. Also, we do not spend much. Therefore, we are very aggressive putting all our money in retirement account and investment. In other words, we may not have enough money to cover this tax bill by April 15. Is there a way to ask for extension? Or should we use HELOC to pay the bill (4% interest)?

3. I think I should learn a lesson here, to do tax planning beforehand. However, if we do need to pay $40k more in tax, which means $3k more every month, or something more than $1500 every paycheck...My current paycheck with all deduction (401k, health insurance, tax) is only $1900..Does that mean my salary will go down to $400 every paycheck? This does not make much sense to me. Well, this year we have a house with mortgage and property tax, so maybe the tax bill should be better. But, we no longer have safe harbor, so how should I estimate how much more tax I should withhold?

I'm confused...how's that work?  I make 57k and I take home ~$3k net a month.  Even with $18k 401k and $6650 HSA ($2k/mo pre-tax, in 40% bracket that'd be what, $600 a check), how are you getting that low with 4x my income?  Or do you have uneven incomes and are you doing this deduction from only one of them?

[ltt]

Please go find a CPA and have them do your taxes.  It won't cost you that much, and they are up-to-date on tax issues.

[Rein1987]

The smart thing as you said would be to have planned your witholding when you got married.

I don't think the complaint is with the amount owing, but rather with the fact that getting married increased their taxes. Unfortunately, that's just a well-known part of US tax law for high-income wage earners. The easiest solution is divorce.

Oh I totally agree its not fair, it shouldn't be this way.

Well, I know this is a well-known issue, but it is very surprising to me that it can hit $40k...I imagine something like 10k to 20k..

[Rein1987]

My DH and I got married last year. Because I graduated in mid 2013, I'm very confident that my full year salary in 2014 is much higher than 2013 so we did not change the tax withhold (still withhold at single rate), with the hope that we will hit the safe harbor. Now the tax time comes, and we were shocked by the amount of tax we owe to IRS: almost $40k !!! Marriage tax penalty sucks...

So I have three questions here:

1. This $40k is calculated by turbotax. I guess this is not a common number that we should owe to IRS. Should we hire an account to do the tax again? Maybe we can reduce the tax bill a little, or maybe there are some other troubles with this large tax bill...

2. I guess I deserve some face punch here....so my husband and I just bought a house last month, with only $30k liquid emergency fund. I did not do a very good calculation on the tax bill at that time that I only expect something like $10k. Also, we do not spend much. Therefore, we are very aggressive putting all our money in retirement account and investment. In other words, we may not have enough money to cover this tax bill by April 15. Is there a way to ask for extension? Or should we use HELOC to pay the bill (4% interest)?

3. I think I should learn a lesson here, to do tax planning beforehand. However, if we do need to pay $40k more in tax, which means $3k more every month, or something more than $1500 every paycheck...My current paycheck with all deduction (401k, health insurance, tax) is only $1900..Does that mean my salary will go down to $400 every paycheck? This does not make much sense to me. Well, this year we have a house with mortgage and property tax, so maybe the tax bill should be better. But, we no longer have safe harbor, so how should I estimate how much more tax I should withhold?

I'm confused...how's that work?  I make 57k and I take home ~$3k net a month.  Even with $18k 401k and $6650 HSA ($2k/mo pre-tax, in 40% bracket that'd be what, $600 a check), how are you getting that low with 4x my income?  Or do you have uneven incomes and are you doing this deduction from only one of them?

My salary is between 100k to 110k. The other income is bonus and stock. My husband has a similar salary structure. Because the stock was very strong in 2014, it raised my total gross to a very high number....And, company stock is not very liquid in the sense it has a trading window. The window opens for 4 weeks every quarter. So we mostly leave the stock untouched (We do not pay attention to track when the window opens so we miss the chance to sell it for most of the time. The window is closed between now and April 15, so no stock can be sold to cover the tax bill)

Then, my most recent paycheck looks like (withhold changed to married but no additional withhold):
gross: 41xx
FIT taxable wages: the same (no pre-tax 401k was deducted from this paycheck, because it is already maximized this year. I took several 0 net paycheck at beginning of the year).
Taxes: 12xx
Deductions: 1xxx (I put 1000 to after-tax 401k every paycheck, the other xx is for insurance)
Net pay: 19xx

So if I withhold 1500 more, my paycheck will go to 4xx....
Our company allows mega backdoor, e.g., 53k 401k in total including after tax 401k, so I planned putting $1k every pay check there.

[Rein1987]

From what you've said, it's not clear that your tax liability is actually $40k higher than it would have been if you weren't married. All you know for sure is that you owe $40k right now. You don't know that if you prepared separate non-married returns, there would be no tax owing. You haven't really provided enough information to make substantive comments in this thread.

I think you make a perfect point here. Maybe the marriage penalty is not like 40k.

Because before our marriage, we had similar salary/earning structures, and we both had refund, my guess is that we will get refund if we withhold the same way this year. That's why I estimate the penalty to be 40k. Or at least, my husband has the same earning/salary structure. For me, my previous year is not a full working year, so I may get less refund if I was single.

[waltworks]

Hire CPA, you do not have your shit together enough to do this on your own.

-W

[Wile E. Coyote]

Is any of that a penalty for underpayment?  I think calculating the safe harbor when you both filed separately in the prior year can be a bit tricky in TurboTax.  You may want to look at that if any of this relates to a penalty for underpayment.

[Rein1987]

Is any of that a penalty for underpayment?  I think calculating the safe harbor when you both filed separately in the prior year can be a bit tricky in TurboTax.  You may want to look at that if any of this relates to a penalty for underpayment.

Well, I think I need to go to a CPA tomorrow...

Thank you for all the suggestions

[DavidAnnArbor]

You're also running up what's called the Alternative Minimum Tax because you have such a high gross income. The alternative minimum tax will not enable you to take certain deductions on your schedule A.

[DavidAnnArbor]

I'd also suggest not holding so much income in your company's stock, but instead when the trading window becomes available again, selling it, and investing the proceeds into a total stock market index fund.

[Rein1987]

You're also running up what's called the Alternative Minimum Tax because you have such a high gross income. The alternative minimum tax will not enable you to take certain deductions on your schedule A.

Well, what shocked me is that, this year our tax gets out of AMT...In other words, we are paying more than AMT amount!
I guess this is really rare...but then our state tax and property tax can be deducted...

[Rein1987]

I'd also suggest not holding so much income in your company's stock, but instead when the trading window becomes available again, selling it, and investing the proceeds into a total stock market index fund.

I'd love to do this, but a lot of them have capital gain...I'm a little bit hesitate because selling them creates more tax problem...
Is there way to diversify the portfolio without selling and trigger capital gain? (The stock vest date does not align well with the window, so it's not very feasible to sell it immediately at the vest date..what I did is to sell stock at loss and keep those with gains...but always sell at loss does not feel good)

[fodder69]

I'll just say CPA, CPA, CPA. You situation sounds complicated enough to certainly warrant it, and with that kind of money you need to pay to get the certainty. Any amount you pay is tax deductible next year so there is that.

As far as paying by April 15th, the late payment penalty is .5% of unpaid taxes so provided it is within a month or two it's not a big deal to pay it later, but always file on time!

[dragoncar]

Ok yes go find a cpa .  But it's really not all that bad.  Penalty interest rates are ridiculously low.  Get a payment plan set up, file on time, and you are still rolling in dough.  Just fix it and move on

[forummm]

The penalty for not paying by April 15th is pretty low, and it's waived in many cases. In your case, I imagine the 2 of you will have withheld 100% of your total tax due last year, so your penalty would likely be waived. You can also work out a payment plan with the IRS--they are very good about that as long as you actually pay them what you owe. The interest they charge on that is similar to Treasuries, so it's super low.

But definitely find out how much you actually owe before panicing.

[Sibley]

Based on what I've gathered, I agree you need some professional tax help. You're past what I know (I'm an accountant, used to do taxes for a CPA firm), and generally once someone hits that point you're justified in hiring someone.

Problem - you're going to have trouble finding a good one this late in tax season. All the ones you want are swamped. If possible, try to find a CPA firm that has people who mostly or only do taxes. If you're willing, they'll love you if you can file an extension and then take care of this in late April or May.

Once you get this sorted out, you can go back to doing your own if your comfortable. Up to you though.

[RelaxedGal]

3. I think I should learn a lesson here, to do tax planning beforehand. However, if we do need to pay $40k more in tax, which means $3k more every month, or something more than $1500 every paycheck...My current paycheck with all deduction (401k, health insurance, tax) is only $1900..Does that mean my salary will go down to $400 every paycheck? This does not make much sense to me. Well, this year we have a house with mortgage and property tax, so maybe the tax bill should be better. But, we no longer have safe harbor, so how should I estimate how much more tax I should withhold?

We went through a similar situation last year, so you have my sympathies!

The IRS has a calculator online and you can use that to estimate your income tax for next year.  Unfortunately unpredictable stock gains are going to throw a wrench in things no matter what, but it will give you a ballpark.  Sorry I don't have the link my husband used last year, but this looks promising: http://apps.irs.gov/app/withholdingcalculator/ 

I assume any CPA you hire would do the same, but we didn't bother with a CPA.  We only owed $60K total, and had to pay in something like $8K because my husband messed up his withholding when he started a new job mid-year 2013.  We had the cash on hand, so I can't help with extension filing /funding tips either.  Sorry!

Semi-related: Why do you put after-tax funds into your 401k rather than other taxable investments like an index fund?  Our financial advisor didn't recommend the 401k, possibly due to investment options which are better for you guys.  For us, having money in taxable accounts means it's pretty easy to sell some investments and have cash in about a week for events like this.  If you don't have a financial advisor yet, consider the idea.  At a half million/year income, making your investments do the best they can for you is in my opinion worth the annual fee.  We pay $1200/year and our returns (vs what I would do unsupervised) make up for it.

[seattlecyclone]

I'm honestly a bit surprised at all the advice to hire a CPA. The OP's taxes aren't that complicated - just employment income and some capital gains. Big numbers are just as easy to add up yourself as small numbers are.

I mostly blame the IRS's supplemental withholding rates for the big bill at the end of the year. The IRS mandates that any bonus income (such as stock grants) be withheld at a flat 25% rate (until you get to $1 million of bonus income in a year, at which point the withholding changes to 39.6%). For someone in the 28-33% bracket, this isn't quite enough. You'll need to submit a new W-4 with zero exemptions and some extra withholding per paycheck to make up the difference going forward.

[dandarc]

3. I think I should learn a lesson here, to do tax planning beforehand. However, if we do need to pay $40k more in tax, which means $3k more every month, or something more than $1500 every paycheck...My current paycheck with all deduction (401k, health insurance, tax) is only $1900..Does that mean my salary will go down to $400 every paycheck? This does not make much sense to me. Well, this year we have a house with mortgage and property tax, so maybe the tax bill should be better. But, we no longer have safe harbor, so how should I estimate how much more tax I should withhold?

We went through a similar situation last year, so you have my sympathies!

The IRS has a calculator online and you can use that to estimate your income tax for next year.  Unfortunately unpredictable stock gains are going to throw a wrench in things no matter what, but it will give you a ballpark.  Sorry I don't have the link my husband used last year, but this looks promising: http://apps.irs.gov/app/withholdingcalculator/ 

I assume any CPA you hire would do the same, but we didn't bother with a CPA.  We only owed $60K total, and had to pay in something like $8K because my husband messed up his withholding when he started a new job mid-year 2013.  We had the cash on hand, so I can't help with extension filing /funding tips either.  Sorry!

Semi-related: Why do you put after-tax funds into your 401k rather than other taxable investments like an index fund?  Our financial advisor didn't recommend the 401k, possibly due to investment options which are better for you guys.  For us, having money in taxable accounts means it's pretty easy to sell some investments and have cash in about a week for events like this.  If you don't have a financial advisor yet, consider the idea.  At a half million/year income, making your investments do the best they can for you is in my opinion worth the annual fee.  We pay $1200/year and our returns (vs what I would do unsupervised) make up for it.

OP said back-door Roth - why have it in taxable when you can get it into the Roth account and grow / withdraw tax free down the road?  Hopefully this is one of those roll-over as you go back-door Roth's.

[rocketman48097]

What ever you do, don't stop your pre tax contributions.  You make too much to do that.

That said,

Can you suspend your church tithings?  I am sure they won't mind if you "catch" them up later, will they? 

Any other areas you are spending too much in?  Really try to cut back between now and tax time, assuming your bill is correct.  Before leaving your computer, change your filing statuses to single and decrease your withholding allowances.

If that is all done, next you can take out a loan.  You can extinguish this thing quickly. 

[Rein1987]

I'm honestly a bit surprised at all the advice to hire a CPA. The OP's taxes aren't that complicated - just employment income and some capital gains. Big numbers are just as easy to add up yourself as small numbers are.

I mostly blame the IRS's supplemental withholding rates for the big bill at the end of the year. The IRS mandates that any bonus income (such as stock grants) be withheld at a flat 25% rate (until you get to $1 million of bonus income in a year, at which point the withholding changes to 39.6%). For someone in the 28-33% bracket, this isn't quite enough. You'll need to submit a new W-4 with zero exemptions and some extra withholding per paycheck to make up the difference going forward.

This makes perfect sense for me so I should not blame marriage penalty alone:)

Yes, I think the stock and bonus might be a big problem why I have such a huge tax bill. In 2013 because I just joined the company so I did not have any bonus/stock, which makes me fine. I do not know it was withhold at flat 25% rate. Almost half of my w2 is stock, so definitely I owe IRS a lot of tax....

[Sibley]

Rein - You may also be able to set up a payment plan with the IRS when you file.

seattlecyclone - It can be very costly to make a mistake. Having an expert double check things, particularly since they're in a new "pattern", may be extremely worthwhile. I don't know the ins and outs of stock options, so if I got them I'd be doing a ton of research and possibly getting some help. In general, I'm a big advocate of people preparing their own taxes, but there are times when outsourcing, or just getting help, is justified.

[Rein1987]

3. I think I should learn a lesson here, to do tax planning beforehand. However, if we do need to pay $40k more in tax, which means $3k more every month, or something more than $1500 every paycheck...My current paycheck with all deduction (401k, health insurance, tax) is only $1900..Does that mean my salary will go down to $400 every paycheck? This does not make much sense to me. Well, this year we have a house with mortgage and property tax, so maybe the tax bill should be better. But, we no longer have safe harbor, so how should I estimate how much more tax I should withhold?

We went through a similar situation last year, so you have my sympathies!

The IRS has a calculator online and you can use that to estimate your income tax for next year.  Unfortunately unpredictable stock gains are going to throw a wrench in things no matter what, but it will give you a ballpark.  Sorry I don't have the link my husband used last year, but this looks promising: http://apps.irs.gov/app/withholdingcalculator/ 

I assume any CPA you hire would do the same, but we didn't bother with a CPA.  We only owed $60K total, and had to pay in something like $8K because my husband messed up his withholding when he started a new job mid-year 2013.  We had the cash on hand, so I can't help with extension filing /funding tips either.  Sorry!

Semi-related: Why do you put after-tax funds into your 401k rather than other taxable investments like an index fund?  Our financial advisor didn't recommend the 401k, possibly due to investment options which are better for you guys.  For us, having money in taxable accounts means it's pretty easy to sell some investments and have cash in about a week for events like this.  If you don't have a financial advisor yet, consider the idea.  At a half million/year income, making your investments do the best they can for you is in my opinion worth the annual fee.  We pay $1200/year and our returns (vs what I would do unsupervised) make up for it.

OP said back-door Roth - why have it in taxable when you can get it into the Roth account and grow / withdraw tax free down the road?  Hopefully this is one of those roll-over as you go back-door Roth's.

Yes, we want to take advantage of roth, so we make after tax 401k contribution and rollover them to roth. Setting them at the paycheck level forces me to save and invest.

We did not put too much after tax 401k before because we were considering purchasing a house (a 1400sqft house in our area easily costs more than 1million).  Early this year, after the house downpayment, we thought we do not have large payment in next few years, or next 20 years until our kids go to college (no kids yet). It was then we aggressively put money in after tax 401k...

[Rein1987]

What ever you do, don't stop your pre tax contributions.  You make too much to do that.

That said,

Can you suspend your church tithings?  I am sure they won't mind if you "catch" them up later, will they? 

Any other areas you are spending too much in?  Really try to cut back between now and tax time, assuming your bill is correct.  Before leaving your computer, change your filing statuses to single and decrease your withholding allowances.

If that is all done, next you can take out a loan.  You can extinguish this thing quickly.

Thank you for your suggestion. We have suspended all our spending plan (e.g., home improvement, repair...) and will not dine out for the next 1.5 month. We will also not hike in the weekend because long drive costs more gas. We always kept our grocery bill under $150, so I believe its good here. For tithe, I just found out that donating stock is more tax efficient so I'll donate my DH and my company stocks when the window opens. (I do not need to pay long term capital gain on donated stocks, which is a great news for me.

[RapmasterD]

With the amount of your gross income you should definitely consider hiring a CPA quickly. Yes, it's a lot more expensive than a copy of TurboTax, but if you ever get audited it's nice to have somebody to speak with.

That said, you should also calculate your own FULL tax liability. I spend almost no time frittering on what I owe or will get back. I spend a lot of time vexing on my total Federal and California tax payments.

Based on your gross, it doesn't sound like the 40K is completely outlandish, but again we don't know your total liability unless I didn't pick something up in the previous comments.

[electriceagle]

My salary is between 100k to 110k. The other income is bonus and stock. My husband has a similar salary structure. Because the stock was very strong in 2014, it raised my total gross to a very high number....And, company stock is not very liquid in the sense it has a trading window. The window opens for 4 weeks every quarter. So we mostly leave the stock untouched (We do not pay attention to track when the window opens so we miss the chance to sell it for most of the time. The window is closed between now and April 15, so no stock can be sold to cover the tax bill)

YOUR HAIR IS ON FIRE

....and its not because of the tax bill.

Stock grants are taxed asymettrically. You are taxed on stock grants as they vest. If you have a rising stock, this can push you into a high tax bracket and a large tax bill.

If the stock falls and you sell it, you get to deduct the amount of the loss -- but only up to $3k/year.

So, if your $180k of stock falls through the floor, or $360k of stock halves in value, it will take 60 YEARS for you TO RECOVER THE TAXES that you paid when you received the stock. This doesn't account for the likelihood that you will be in a lower tax bracket in a down year.

When the stock vests, you are liable for the value at the time of vesting. The capital gain/loss at that time is zero. If you sell then, additions to your tax bill should be minimal.

If you keep your stock you're betting that the net present value of gains exceeds the net present value of losses PLUS taxes. You know your company and industry, so you can decide whether to take that bet.

[Rein1987]

My salary is between 100k to 110k. The other income is bonus and stock. My husband has a similar salary structure. Because the stock was very strong in 2014, it raised my total gross to a very high number....And, company stock is not very liquid in the sense it has a trading window. The window opens for 4 weeks every quarter. So we mostly leave the stock untouched (We do not pay attention to track when the window opens so we miss the chance to sell it for most of the time. The window is closed between now and April 15, so no stock can be sold to cover the tax bill)

YOUR HAIR IS ON FIRE

....and its not because of the tax bill.

Stock grants are taxed asymettrically. You are taxed on stock grants as they vest. If you have a rising stock, this can push you into a high tax bracket and a large tax bill.

If the stock falls and you sell it, you get to deduct the amount of the loss -- but only up to $3k/year.

So, if your $180k of stock falls through the floor, or $360k of stock halves in value, it will take 60 YEARS for you TO RECOVER THE TAXES that you paid when you received the stock. This doesn't account for the likelihood that you will be in a lower tax bracket in a down year.

When the stock vests, you are liable for the value at the time of vesting. The capital gain/loss at that time is zero. If you sell then, additions to your tax bill should be minimal.

If you keep your stock you're betting that the net present value of gains exceeds the net present value of losses PLUS taxes. You know your company and industry, so you can decide whether to take that bet.

Thank you for making a great point.

However, capital loss can be used to erase capital gain. From US stock market history, it's likely to get some capital gain to erase all the capital loss. E.g., invest in some stock index fund in taxable account and rebalance them will very likely lead to capital gain.

But I totally agree with you that it is entirely possible to take my whole life to recover the loss...