Chapter 30

Tax Rules for Investors in Securities

You have the opportunity to control the taxable year in which to realize gains and losses. Gains and losses are realized when you sell, and if there are no market pressures, you can time sales to your advantage.

If you sell securities at a gain in 2013, and you held the securities more than one year, you can benefit from the 0%,15% or 20% rate for long-term capital gains.

The $3,000 limitation ($1,500 if married filing separately) on deducting capital losses from other types of income is a substantial restriction. If you have capital losses exceeding the $3,000 (or $1,500) limit, it is advisable to realize capital gains income that can be offset by the losses.

30.1 Planning Year-End Securities Transactions

First establish your current gain and loss position for the year. List gains and losses already realized from completed transactions. Then review the records ...

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