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Tax... not loss harvesting... gain avoidance?

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  • Tax... not loss harvesting... gain avoidance?

    If my IPS calls for me to rebalance, and I would need to sell a decent amount of QQQ incurring cap gains in a taxable, still in accumulation phase of career, one option would be to buy SQQQ in a tax deferred account where cash is available therefore avoid LTCG taxes but pay 1% ER on SQQQ to neutralize QQQ overweightedness until hopefully portfolio keeps growing and can sell SQQQ as needed. Am I overthinking this?

  • #2
    Originally posted by auggie1983 View Post
    Am I overthinking this?
    Yes.

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    • #3
      Originally posted by auggie1983 View Post
      Am I overthinking this?
      Yep.

      Either sell and pay taxes, or don't sell. Going short doesn't make any sense.

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      • #4
        Or keep the QQQ and modify your IPS since tax consequences may not have been taken into account. I bought multiple lots of QQQ back in 2001-03 and am still holding. It’s been more than a 10-bagger and I have no desire to sell.

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        • #5
          Such the trouble with outsized success in taxable -- rebalancing troubles -

          1. DAF appreciated stock if you're donating already - this makes it 25% more efficient (we did this with AMZN stock)
          2. Direct future funds in taxable to lower growth/ higher dividend - as IPS dictates on AA
          3. Tax sheltered - can also place bonds here too; more restrictive, but possible if low tax state -- and how you think inflation/bonds happening too


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          • #6
            Got it, thanks. A problem I've always dreamed of having. Taxable grows much larger than tax sheltered and there's only so much tax sheltered $ to contribute.

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            • #7
              Originally posted by GasFIRE View Post
              Or keep the QQQ and modify your IPS since tax consequences may not have been taken into account. I bought multiple lots of QQQ back in 2001-03 and am still holding. It’s been more than a 10-bagger and I have no desire to sell.
              QQQ a great investment for me also. 10 bagger as well. No reason to sell this in my view.

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              • #8
                Originally posted by auggie1983 View Post
                Got it, thanks. A problem I've always dreamed of having. Taxable grows much larger than tax sheltered and there's only so much tax sheltered $ to contribute.
                Tax sheltered is good but you will appreciate the flexibility having the taxable account.

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                • #9
                  Originally posted by auggie1983 View Post
                  Got it, thanks. A problem I've always dreamed of having. Taxable grows much larger than tax sheltered and there's only so much tax sheltered $ to contribute.
                  It's not emphasized as much on this forum, but having a large taxable account gives you a lot more flexibility. No need to worry about when to FIRE (if that's your goal), RMDs, tax arbitrage, etc.

                  Just plain ole LTCG.

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                  • #10
                    Yea I've started seeing tax deferred as more bonus depreciation. Nice to have with a high taxable year, but at some point LTCG taxes are going to be much less than taxes on distribution as income... and you get the 1031 equivalent of swap till you drop with grow borrow die.

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