Author Topic: Avoiding Capital Gains  (Read 2062 times)

SpaceGhost

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Avoiding Capital Gains
« on: August 08, 2018, 04:13:31 PM »
After hearing that TSLA may go back private, how can one avoid capital gains taxes?  I have owned shares since 2013 so profit would be considerable.  If and when this happens, can one shift profits to a 401K or is there a legal means to postpone or avoid cap gains altogether?  The shares were purchased through brokerage account not attached to any retirement account.

Thanks in advance!

nereo

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Re: Avoiding Capital Gains
« Reply #1 on: August 08, 2018, 05:48:03 PM »
After hearing that TSLA may go back private, how can one avoid capital gains taxes? I have owned shares since 2013 so profit would be considerable.  If and when this happens, can one shift profits to a 401K or is there a legal means to postpone or avoid cap gains altogether?  The shares were purchased through brokerage account not attached to any retirement account.

Thanks in advance!
You can't - at least not legally.   There's no way of 'converting' gains from a taxable account to a 401(k) - that's kinda in the name 'taxable'. Since you've held it for > 1 year they will be LTCG (which is something at least).
Count your stars lucky that you've realized sizable market gains. Best you can do is limit your AGI for this year, but that's not very practical for most.

FWIW I wouldn't worry too much about Tesla actually going private.

Sibley

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Re: Avoiding Capital Gains
« Reply #2 on: August 29, 2018, 10:02:07 AM »
The only thing you could do would be to sell underperformers to generate losses that would offset gains. You'd have to match ST/LT. Since you've owned the stock since 2013, likely LT.

One

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Re: Avoiding Capital Gains
« Reply #3 on: August 29, 2018, 10:59:07 AM »
Congratulations! It's a wonderful problem to have! Good time to take the profits. The taxes probably won't be too bad.  Here is a link to the tax rates, it's from 2013 but they should be the same.  You'll have state tax too.

http://nwhomesearch.com/loophole-for-investors-facing-higher-capital-gains-in-2013/

seattlecyclone

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Re: Avoiding Capital Gains
« Reply #4 on: August 29, 2018, 12:46:41 PM »
You can also donate the shares to a charity or donor advised fund before any sale transaction happens. If you have any charitable ambitions whatever, it's more tax efficient to donate appreciated shares than cash.

Daisy

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Re: Avoiding Capital Gains
« Reply #5 on: August 29, 2018, 09:57:47 PM »
You can also donate the shares to a charity or donor advised fund before any sale transaction happens. If you have any charitable ambitions whatever, it's more tax efficient to donate appreciated shares than cash.

I have donated appreciated shares before. I have also just opened a donor advised fund at Fidelity to take advantage of a huge itemized deduction last year.

If you do have charitable goals in mind, I would donate the shares to the donor advised fund and then sell within the fund (tax-free) and donate money from the DAF.

I found that to donate appreciated shares meant I had to contact the charity directly and go through more work to donate the shares than going the DAF route. I did not know about DAFs when I originally donated shares.

seattlecyclone

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Re: Avoiding Capital Gains
« Reply #6 on: August 29, 2018, 11:06:30 PM »
Oh yes, donating to a DAF is way easier.

reeshau

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Re: Avoiding Capital Gains
« Reply #7 on: August 30, 2018, 05:46:02 AM »
Of course, it looks like this scenario is now just hypothetical.  But, you may also be able to look at your regular earned income for help in addressing this.  If you can reduce your earnings below the point where LTCG is 0%, you can accomplish your goal.  You could do this by maxing out your 401(k), HSA, or look at income deferral if available.  The limit in 2018 for 0% gains is $77,200 for married filing jointly, and just $38,600 for single filers.

 

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