Some of my clients invest in stocks etc., outside of their retirement accounts like IRAs and 401Ks. This retail investing is taxable at favored rates called Capital Gains Taxes. Here are a few factors in this area:
- When you sell a capital asset for more than you purchased it, the result is a capital gain.
- Short-term capital gains result from selling capital assets owned for one year or less.
- Long-term capital gains result from selling capital assets owned for more than one year.
- Assets that are subject to capital gains tax include stocks, bonds, precious metals, real estate, and property.
- Short-term gains are taxed as regular income, according to the U.S. income tax brackets.
- Long-term gains are subject to unique tax brackets that are generally more favorable than the regular income tax brackets.
A nice article can be read at https://www.investopedia.com/articles/personal-finance/101515/comparing-longterm-vs-shortterm-capital-gain-tax-rates.asp
My point in this very brief blog today is that if you have losers and do not anticipate them becoming winners, consider selling them. The losses can be used to reduce taxable gains from others that were winning investments. AND/OR used to reduce ORDINARY INCOME up to $3000. No, having losing investments is not a good thing but this feature makes it a little less ugly.
If you have any questions about Capital gains and its taxation, call me to discuss your specifics.
Best,
Donn Marier
DM-Your Own CFO