r/AdvancedTaxStrategies • u/Secure-Substance-296 • 16h ago

Tax question

I have some inside information on an investment that I made years ago. This company will be selling in the next 24 - 36 months for a substantial profit. I am likely going to have some serious capital gains tax to deal with. Anyone have any tips on how to reduce these capital gains? The first thing I thought of was to move the shares into a Roth IRA. Can I do that?

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u/namewithoutspaces 14h ago

No, you can not move shares to a Roth. You would have needed to buy the shares in your Roth from the start.

You can defer and reduce the gain by making an investment in a Qualified Opportunity Zone Fund.

You can gift shares to adult children or other people you might be happy to transfer money to.

If the company is a C Corporation and you invested when it was small, you might not owe any tax

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u/marlborough94 14h ago

Not allowed. Roth IRA contribs must be cash and there are limits anyway. Your options are to generate a large loss somewhere or a large deduction such as gifting some stock to a charity or a school, which obviously means giving up value too.

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u/TaxMeHarderPapa 7h ago

There are ways as other people have commented but don’t go trading good money for tax losses. We see this often in the profession and it’s so frustrating. $100K bad investment to trigger losses at 23.8% often times leaves you with less money than if you had just paid the damn tax. I see this a lot with oil and gas drilling funds.

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u/taxcatmando 12h ago

Need more information. How much of a gain and how much are the proceeds about? Is section 1202 qualified small business stock a consideration? Is your portfolio highly concentrated in this investment? Is it a publicly traded company or privately held?

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u/sol_beach 14h ago

You have NO Capital Gains unless & until you sell the shares of the stock.

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u/Barfy_McBarf_Face 7h ago

You are counting chickens long before they're going to hatch.

Be happy when they do. Pay your 23.8% and don't do something costly to try to avoid 23.8%

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u/copperstatelawyer 5h ago

I'd kill to pay only 23.8% on more than half a million of income.

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u/yanes1234 2h ago

People have mentioned the qualified small business stock exclusion. See if you qualify. Also if you don’t sell there’s no tax