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I'm trying to come up with a formula that tells me how far a stock must fall from a selling point before I re-purchase it with the assumption it will regain the selling price. In other words, if I sell stock and pay capital gains, at what point could I re-buy the stock to offset taxes paid with the following assumptions:

ASSUMPTIONS

  • Long term capital gain.
  • 0.15 tax rate.
  • Cost basis/share < selling price/share
  • Assumes stock will go down.
  • Assumes stock will recover to selling price.
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Ignoring brokerage fees and the wash-sale rule (both of which are hazardous to your health), and since the 15% LTCG tax is only on the gain, the stock would have to drop 15% of the gain in price since you originally purchased it.

(SALEPRICE - PURCHPRICE) * .15 == Amount it would have to drop

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