Tax question

[Cactus Cactus]

Probably the wrong forum, sorry about that.

Problem: This year I have 19,000 of stock losses from ABC. Losses that would count for taxes as I have closed this position (Bought and sold).

I also I have 13,000 of unrealized gains. I bought CBA and I have not sold yet. When I do sell CBA I'll owe taxes on this money.

I thought that I would hold onto CBA and use the money that I would have otherwise had to pay taxes on if I had sold it as more leverage. However, here is the problem. Stocks losses can be deducted up to your stock gains + 3,000 off your income. If you have more deductions you have to carry it over the years hence 2nd year I'll deduct another 3,000, 3rd year same, .... until I add up to 19,000.

However, for the next few years I only plan on making about 40,000 to 50,000 due to poker being over. Currently my last tax dollar is taxed @ 35% federal and 5.04% state. If poker would still be around and I'd be making this, I would not sell CBA and take the 40.04% write off each year, however I only plan on making 40,000 to 50,000 where the write off is going to be much much less (% wise).

Which is the better option
(1) Do not sell CBA and take the write off each year keeping in my time value of money and that I'll be at the 15-20% bracket and paying taxes on 12,000 for CBA when I sell it or...

(2) Selling CBA. Pay the taxes on CBA (actually deducting it from the loss of ABC) and re buy CBA again


Also, I plan to keep CBA for a while

[thing85]

This a tough call but I'm sure someone here with more tax knowledge than I have can answer it better. Everything else held constant, considering the time value of money, it may be better to wipe out your gain in this year with the capital loss from ABC.

My intuition tells me that it would be better to defer your gain if you're just planning on rebuying the stock again. If the stock goes down, it will reduce your unrealized gain. However, if you sell it and rebuy it and it goes down, you may once again run into the situation of not being able to deduct all of your capital losses right away. Also, if you rebuy it and the price sky rockets leaving you wanting to sell it quickly again, you may not qualify for preferential capital gain treatment if you've held the stock for 1 year or less.

I'm not sure if your tax bracket really makes a difference here if you hold onto the stock. Either way, assuming you've held it for a long-term (>1 year), you'll be paying 15% tax on it (unless you drop below the 15% tax bracket which it doesn't sound like you will).

I'm sorry that I don't seem to be coming to a clear and concise conclusion here, but hopefully something in what I said will help you. If not, hopefully someone else can step in and give a better response.

[SlowHabit]

Another math problem.

[thing85]

I agree...I was just trying to think through it conceptually and was too lazy to crunch the numbers. Also, I don't believe we had all necessary information to come to a numerical conclusion.