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Time securities sales for tax payoffs: year-end planning

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in Centerpiece,Small Business Tax,Small Business Tax Deduction Strategies

IRS websiteIt’s a different story this year-end for investors in securities. Due to pending changes in tax rates for 2013, the usual emphasis on harvesting capital losses has shifted to realizing capital gains.

Strategy: Don’t forget how the “netting rules” work (see box below). Depending on your situation, it may be advantageous to take down some, but not all, of your capital gains in 2012. Similarly, while you might realize certain capital losses this year, you may prefer to postpone others to next year.

And, of course, taxes aren’t the “be-all and end-all.” You should weigh all the relevant investment factors, including the future prospects for the securities, in your decisions to buy, sell or hold.

Background: Barring new legislation, the current six-bracket tax rate structure with a top rate of 35% will be replaced by a five-bracket rate structure with a top rate of 39.6%, beginning in 2013. Also, the tax rate on net long-term cap...(register to read more)

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