The Capital Gains Blog

Archive for August, 2009

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Question: Does it make sense to sell stocks now since the Capital Gains Tax is going up in 2010?

Plus, if health care reform passes, that will certainly crush the private sector. Is the Dow at its peak?

Answer: Capital gains do not go up “in 2010,” they do change “after” 2010.

Yes, I think it will be wise in many situations to sell and lock in the profits and pay the lower tax but it does not need to be in 2009.

This is especially true for low tax bracket people since now and in 2010 you are in a 10% bracket you pay 0% on Long Term Capital Gains, but after 2010 you will pay 15%. For those currently in the 15% bracket who now pay 0% their tax will increase to 20%! There are some (who are sitting on a lot of gains) who probably could take a vacation to limit income in 2010 as to place themselves in the 20% bracket, and earn more in tax savings than their job would pay them.

The “tax selling season” of November/December 2010 is likely to be a very good time to pick up bargains. If you choose to lock in capital gains do so early and be EXTREMELY careful of wash sale rules!

Consider opening a Roth IRA with some of your money as you can then simply ignore capital gains–they do not affect you and makes it great fun to make short term profitable trades. This may be especially true as I suspect that capital gains will go up again after 2011, after all somebody has to pay our debt! Within your Roth your gains “may” be protected even if capital gains rise much higher.

As for the Dow at its peak? No, of course not, it will probably be higher in ten or twenty years.

See my source for a good table, but be careful as the tax brackets do not line up in the table.

Financials extend rally with modest Tuesday gains

NEW YORK (MarketWatch) — Shares of U.S. financial stocks posted modest gains Tuesday, led by credit-card lenders as Stifel Nicolaus upgraded Capital One Financial. The gains in early trading kep…

Killian Sees Facebook IPO in 2010 to Gain Growth Capital: Video

Question: I am confused by the 1031 law regarding capital gains. My husband and I want to start investing in real estate

If we buy, improve and then sell, are we safe as long as we re-invest that money and the profits into another property of equal or greater value? These properties would probably all be sold within 4 to 6 months of the original purchase. Can you keep going re-investing your money without having to pay capital gains taxes? Or is this just a stupid question, considering the voracity if the IRS? Do you also pay State AND Fed Taxes on Capital Gains???

Answer: A section 1031 exchange explicitly states that property of equal substance and or value must be transferred or acquired within 45 days of transfer of the original property. The improvements add to the cost of your property for tax purposes so hang on to your receipts. A 1031 exchange only merely defers payment on Capital Gain Taxes should you ever elect to permanently dispose of your investment property. There is one wrinkle in the internal revenue code and that is if the investment property is considered a residential property in nature, and if this becomes your principal residence for two out of the last five years, you will avoid paying tax on the first five hundred thousand dollars of profit. If you are also considering leaving property for your children you should perhaps consider setting up a living trust so as to avoid paying estate taxes or having all your assets being eaten up by attorney’s fees during probate. For further questions I would recommend a Certified Public Accountant for tax planning and a Trust Attorney for estate planning.

Good luck to you as it seems you are on the right track.

Sincerely,

James Wright

Dubai Stocks Drop Most in World on Concern Gains Are Overdone

Jan. 4 (Bloomberg) — Dubai’s benchmark index declined the most in almost two weeks, led by Emaar Properties PJSC and Dubai Financial Market, on investor speculation that yesterday’s gains outpaced growth prospects in the debt-laden emirate.

Trichotillomania gains PA State Capital exposure

Neuberger Berman High Yield Strategies Fund Announces Monthly Distribution

NEW YORK—-The Board of Trustees of Neuberger Berman High Yield Strategies Fund has declared a monthly distribution of $0.085 per share. The distribution announced today is payable on January 29, 2010, has a record date of January 15, 2010 and an ex-date of January 13, 2010.

Question: With the average persons income tax being around 35% or having to work four months for free?

where does all this money go?…….here is a list of other taxes you pay not including income tax……… Alternative Minimum Tax (AMT)
Capital Gains Tax
Corporate income tax
Estate tax in the United States
Excise tax (includes taxes on cigarettes and alcoholic beverages)
Federal income tax

Federal unemployment tax (FUTA)
FICA tax (includes Social Security tax and related programs)
Gasoline tax
Generation Skipping Tax
Gift tax
IRS penalties

Local income tax
Luxury taxes
Property tax
Real estate tax
Recreational vehicle tax
Road usage taxes (Truckers)
Sales tax and equivalent use tax

School tax
State income tax
State unemployment tax (SUTA)
Telephone federal excise tax
Vehicle sales tax
Workers compensation tax

Answer: The Federal Income Tax goes to pay the Federal Reserve all of the Interest we owe them when they print money out of thin air and then lend it to us.

The constitution gave US the right to mint our own money, so why we have a MIDDLE MAN like the FED is beyond me.

Just as an FYI – The Federal Reserve is NOT a Gov’t Entity. It is owned by various international, very wealthy bankers, who are not required to provide US the American Public with any accountability on what they do, nor are they subject to an audit of any kind.

The State Taxes are different, I dont mind paying those as much, because the State Taxes really do go towards running the State – It’s the FED Income tax that really gets me angry. No one in Washington seems to try to budget at all. They will spend and spend and spend our money and they dont care.

We are slaves to the system, and having to work for 4 months out of every year to pay taxes on a bankrupt system makes me sick.

A look back at 2009’s impact on southern W.Va.

January 2009 was a month of history-making politics, the unveiling of the $24 million Beckley Intermodal Gateway and a special remembrance ceremony for victims of the Ghent explosion on Jan. 30, 2007.

Mike Huckabee – THE FAIRTAX REVOLUTION PART 1

Question: A Recent Poll Shows 65% are against raising the Capital Gains Tax. Why Does Obama think this is a good idea?

65% Were Against Raising the tax
18% Were in Favor
The Rest Were Undecided

Economosts say Raising the Capital Gains Tax will hurt the Economy.

Answer: I am one of those! He and Hillary both promised during that ABC debate, they would not raise taxes on the middle class. And Obama turns around in the next sentence and says he will raise capital gains. Come again? Is he stupid, who do you think will be most affected by raising capital gains? THE MIDDLE CLASS.!

New year, old worries for U.S. stocks

NEW YORK (Reuters) – U.S. stocks closed out 2009 with the best performance in six years, but monthly employment figures in the first week of the new year will keep investors focused on what is likely …

Lec 13 | MIT 8.02 Electricity and Magnetism, Spring 2002