I'm looking to sell some shares of stock I bought, which have provided a 62% return since I bought them a few months ago and want to roll over the proceeds into a mutual fund. I was just wondering if there a way to roll the gains of that stock over into a mutual fund without incurring short term capital gains taxes.


1 Answer 1


If the investments are in a non-retirement, taxable account, there's not much you can do to avoid short-term capital gains if you sell now.

Ways to limit short-term capital gains taxes:

  1. Donate -- you can donate some of the stock to charity (before selling it).

  2. Transfer -- you can give some of the stock to, say, a family member in a lower tax bracket. But there are tons of rules, gift limits, and won't work for little kids or full time students. They would still pay taxes at their own rate.

  3. Protect your gains by buying puts. Wait it out until the long-term capital gains rate kicks in. This allows you to lock in your gains now (but you won't benefit from potential future appreciation.) Buying puts also costs $, so do the ROI calculation. (You could also sell a call and buy a put at the same time and lock in your gains for certain, but the IRS often looks at that as locking in the short-term capital gain, so be careful and talk to a tax professional if you are considering that method.)

  4. Die. There's a "step-up" basis on capital gains for estates.

source: http://www.forbes.com/2010/07/30/avoid-capital-gains-tax-anschutz-personal-finance-baldwin-tax-strategy.html

  • 8
    please note that other assets may become taxable on death and that by dying you may limit your ability to enjoy returns on capital.
    – MD-Tech
    Dec 9, 2015 at 17:43

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