This might be a strange notion but people donate to charity because they... want to donate to charity.
Now, if you are going to donate to charity, donating an appreciated stock may be more tax-efficient than selling it and then donating the proceeds.
I think this question is very nearly off-topic for this site, but I also believe that a basic understanding of the why the tax structure is what it is can help someone new to investing to understand their actual tax liability. The attempt at an answer I provide below is from a Canadian & US context, but should be similar to how this is viewed elsewhere ...
It sounds like you're describing tax gain harvesting, where you intentionally realize capital gains in a low-tax-rate period in order to increase your cost basis and reduce future capital gains at higher rates.
No, it is not correct.
You bought those 909 shares for $90,900. You sold them for $99,990. Your capital gain is $9,090
Or you could calculate the cap gain by multiplying the share price increase by the number of shares sold:
909 * $10 = + $9,090
In this case you should consult an actual tax professional since that can be rather complicated.
Tax treatment depends on whether (and how long) you did own actual stock at any point or if your options were directly converted to cash in a "same day sale".
Assuming it's a "Same day sale" then the profit (sell price - exercise price) is taxable ...
There are some issues with this plan:
you have to trust they will do what you want with the money.
you have to hope that they won't need it.
you hope that the presence of this investment fund doesn't impact their ability to get Medicaid coverage for their long term care needs.
they have to die first.
you have to trust that their end of life documents don't ...
(Assuming US based on profile)
Welcome to the world of income taxation. Your $1,000 in short-term gains will be treated as "normal income" and subject to your marginal tax rate. So there is fundamentally no difference in this and "I just got a $1,000 bonus - how can I reduce the tax on that income". The answers would be the same:
Do something to increase ...
You need to meet a woman (or man if you are in a state that allows same sex marriage) who has a carried forward loss or other loss that exceeds the $3K/yr they can take against their own income. If they had a loss of $200K some time ago, and are taking $3K/yr, they may still have $100K they can offset with you.
Marriages have been based on less than this.
Assuming that you had no gains in year ONE when you realized $50k in losses, you would deduct $3k on your taxes and have a carry forward loss of $47k.
In year TWO you realized $50k in capital gains. The $47k would be neutralized and you would pay taxes on $3k in year TWO.
You cannot get "your investment" out and "leave only the capital gains" until they become taxable at the long-term rate. When you sell some shares after holding
them for less than a year, you have capital
gains on which you will have to pay taxes at the short-term capital gains rate (that is, at the same rate as ordinary income).
As an example, if you ...
If the numbers are somewhat near correct, I think this would justify spending some money on good accounting advice.
In the general sense you will have to claim any profit as income from the sale of an asset. Costs can be deducted from proceeds to arrive at the profit figure, and a good accountant will point out which costs are allowed and which are not.
Assuming your investments aren't in any kind of tax-advantaged account (like an IRA), they are generally not tracked and you indeed may pay more taxes. What will likely change, however, is your cost basis. You only pay tax on the difference between the value of the investment when you sell it and its value when you bought it.
There is no rule that says ...
You don't generally pay capital gains taxes until you sell the stock.
If you bought it in 2013 and the price goes up in 2014 but you just hold on to the stock, you won't have to pay any taxes on it. If you then sold it in 2015 for a profit, you'd have to pay capital gains taxes on the profit.
Note that this excludes dividends. Dividends may complicate the ...
The capital gain distribution reflects what positions were sold. The value of the fund represents the assets that the fund still holds. The two may be very different.
Imagine I have the world's simplest mutual fund. I start off the year with $1 million in cash and there are 10,000 shares so each share is worth $100. On Jan 1, I buy $800,000 worth of ...
There are two scenarios to determine the relevant date, and then a couple of options to determine the relevant price.
If the stocks were purchased in your name from the start - then the relevant date is the date of the purchase.
If the stocks were willed to you (i.e.: you inherited them), then the relevant date is the date at which the person ...
Don't let the tax tail wag the investment dog.
There is risk in exchanging this (known) property for another (unknown) property. That risk may be more than $9000 worth of risk. Tax considerations are important, but most important is that your investments make money. If you intend to continue as a landlord, you had better be sure you are finding a better ...
D Stanley gave a correct answer. Let me offer an observation. In a year where any of your investments are down, I'd suggest taking the loss (being mindful of wash sale rules), and use it to offset up to $3000 of ordinary (15%) income or to offset the tax of a Roth IRA conversion. Then in future years, continue to use the tax gain harvest strategy.
You can reduce your capital gains taxes in two ways (USA), off the top of my head:
Sell something else at a loss to offset some of the gains
Don't sell until you've held the asset for more than 1 year to qualify for the lower long-term capital gains rate.
Although an ETF trades like a stock, it is really a stock mutual fund. And like all mutual funds, when you invest there are two ways that you realize a capital gain. As you mentioned, you have a capital gain when you sell a stock for more than you purchase it for, so when you finally sell this ETF, you will have a capital gain if the value of the ETF has ...
Source: Investopedia: Do non-U.S. citizens living outside the U.S. pay taxes on money earned through a U.S. internet broker?
From the sounds of it, you will be considered a non-resident alien, and will be subject to no US capital gains taxes as such. That being said, as you already noted, you will be subject to capital gains in your home country.
Note that ...
First a warning: if you're a foreigner you must familiarize yourself with the FATCA and FBAR requirements. Search this forum and ask questions if you don't know what these are. The penalties are horrifying and can drive you bankrupt even if you don't even owe a dime in taxes, just because you didn't attach a piece of paper to your tax return.
To your ...
Your question is best asked of a tax expert, not random people on the internet.
Such an expert will help you ask the right questions. For example you did not point out the country or state in which you live. That matters.
First point is that you will not pay tax on 60K, its expensive to transact real estate, so your net proceeds will be closer to 40K. ...
You can use a Roth IRA for retirement and you can still withdraw all of your contributions at any time. You can also withdraw $10,000 worth of the earnings in your Roth IRA for a first-time home purchase. You can also withdraw for unreimbursed medical expenses and qualified education expenses.
Full details are available in IRS publication 590.
There is a ...
In June 2016 the American Institute of CPAs sent a letter to the IRS requesting guidance on this question.
Quoting from section 4 of this letter, which is available at https://www.aicpa.org/advocacy/tax/downloadabledocuments/aicpa-comment-letter-on-notice-2014-21-virtual-currency-6-10-16.pdf
If the IRS believes any property transaction rules should ...
According to the general introduction to the HMRC manual on CGT:
Chargeable gains accrue on the disposal of assets.
There's a bunch of other material but none of it seems to put any qualification on timing. If you carried out an arbitrage you must have bought and sold one or more assets. So by that definition it seems like your profit is a capital gain, ...
You are taxed on realized gains. So you would be taxed on the $1 per share profit. The next time you sell, your cost basis would be $1.30.
Does time period between these events make any difference?
Only when determining if the capital gain is classified as short-term or long-term. If the sale is more than a year after the purchase, the gain is ...
Your scenario (which here I won't debate, but just apply the math) is that your marginal rate is 28% when money is earned, and your rate in retirement is 25%.
Traditional IRA - you have $10,000 pretax. It grows to $100,000 and on withdrawal, you lose 25% to tax, $75,000 net.
Traditional IRA (no deduction) - you have $7200, same 10X return $72,000. On ...