Author Topic: Sell or Not  (Read 686 times)

focals

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  • Location: Portland, OR
Sell or Not
« on: June 24, 2021, 04:41:08 PM »
Hi there,
Thanks in advance for reading my post and providing your opinion. This one is driving me nuts!

I'm sitting on about $200k of my former employer's (Paypal) company stock (1/3 of investments). Estimated Long-term Capital Gains Tax is $12k.

I'm debating if I should sell right away (to avoid Concentration Risk) or wait for a year or two until I plan to retire (and have less enough income so can most likely avoid this tax).

I would really appreciate it if you could give me your opinion. Also, if I should post in a different channel, please let me know.

Thanks again,
AH

PhysicianOnFIRE

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    • Physician On FIRE
Re: Sell or Not
« Reply #1 on: June 25, 2021, 01:56:27 PM »
A lot can happen in 2 years, both in your life and life plans and with the value of the stock.

But when comparing the cost of selling now and paying the tax when you'll presumably be in the 0% LTCG bracket in 2 short years, I think it's worth the risk to wait.

focals

  • 5 O'Clock Shadow
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  • Posts: 41
  • Age: 48
  • Location: Portland, OR
Re: Sell or Not
« Reply #2 on: June 26, 2021, 11:28:32 AM »
Dear Physician on Fire,
Thank you so much for your reply. I really appreciate it!



Thanks,
AH

MustacheAndaHalf

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Re: Sell or Not
« Reply #3 on: June 29, 2021, 10:27:25 AM »
Hi there,
Thanks in advance for reading my post and providing your opinion. This one is driving me nuts!

I'm sitting on about $200k of my former employer's (Paypal) company stock (1/3 of investments). Estimated Long-term Capital Gains Tax is $12k.

I'm debating if I should sell right away (to avoid Concentration Risk) or wait for a year or two until I plan to retire (and have less enough income so can most likely avoid this tax).
Ah, my guess was right: $12k / 0.15 = $80k, from your thread about selling or not.  Taxes are a separate issue, so I think it's fair to have 2 threads.

Every year, single filers have $40k of room for 0% long-term capital gains (LTCG).  But that's misleading, since LTCG start on top of your other income/dividends.  For example, if you have $15k of dividends, you only have ($40k - $15k) = $25k at 0% LTCG tax rate.  Married filers get $80k at 0%.

Your W-2 income goes away when you stop working.  But you will probably still have any 1099-DIV and 1099-INT after you retire.  You might want to add those up, so you can estimate how much you can sell each year without incurring tax.