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My annual income this year is low enough to take advantage of gains harvesting on some long-term stock share profits to reset the cost basis for a portion of my overall holdings. The share amounts and purchase dates/prices are:

Purchase Date           Shares           Price
6/30/2006                182             $6.95
6/29/2007                 84             $10.30

The stock is currently trading at ~$200 and I'll be looking to harvest about $20K worth.

  1. Is there any reason why I would want to reset the cost basis on the 2006 shares vs the 2007 shares?

  2. When harvesting, is there a generally a time limit on how long you can wait, after selling, to re-purchase the stocks?

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If your goal is to harvest $x of gains, the number of shares to sell is x / (gain per share). Therefore, selling the highest gain per share lots will minimize the number of shares sold reach a harvest goal. If your commissions or other transactions costs are on a per share basis rather than a fixed fee, it may be attractive to sell the lower cost basis shares.

On the other hand, if you needed cash or wanted to diversify, you might consider selling the higher cost basis lots (the ones with the smallest gain) as this would allow you to sell as much as possible before hitting your gains target.

The above is not tax advice, it is only for general educational purposes. You may want to meet with a tax advisor to ensure that gains harvesting is your best strategy.

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Is there any reason why I would want to reset the cost basis on the 2006 shares vs the 2007 shares?

If shares are $200 and you want to free up $20k then you will be selling 100 shares. If you sell only 2006 shares then you will have a larger capital gain. If you sell 84 of the 2007 shares and 16 of the 2006 shares then the capital gain will be lower.

When harvesting, is there a generally a time limit on how long you can wait, after selling, to re-purchase the stocks?

In the US, there is no limitation on repurchase of shares when you are booking a gain. OTOH, if you were booking a loss then you would create a wash sale if you bought shares or a “substantially identical” security (equity or option) within 30 days before or after the sale date of the loss.

  • Just to clarify, if I have $20,000 worth of harvestable gains under the $38,700 threshold of the 0% Capital Gains bracket, am I trying to meet that $20,000 amount in the overall sale of the stock or in the overall capital gains amount after the sale of the stock. i.e... if the shares were purchased at $6.95 and are currently worth $200, am I trying to sell 100 shares for $20,000 or am I trying to sell X shares so that the capital gains for the difference between purchase price and selling price equates to $20,000? – Brian Patrick Hummel Oct 28 '18 at 18:28
  • (1) Selling 103.6 shares of shares bought at $6.95 nets $20,720 for a net gain of $20k. (2) Selling 84 shares bought at $10.30 and 21.1 shares bought at $6.95 nets $21,011 for a net gain of $20k. It doesn't make a big difference ($20,720 vs $21,011) because your share price appreciation is very large compared to the respective purchase prices which in comparison, were fairly close to each other – Bob Baerker Oct 28 '18 at 19:13
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Is there any reason why I would want to reset the cost basis on the 2006 shares vs the 2007 shares?

I would likely just go FIFO for everything. Besides that it shouldn't really matter.

When harvesting, is there a generally a time limit on how long you can wait, after selling, to re-purchase the stocks?

(I'm only 99% sure on this) No. You could even buy before you sell.

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