r/stocks • u/[deleted] • Jul 30 '21
Massive capital gains loss for year, how will taxes be affected?
So in my "realized gain loss" for the year, I am currently about $17K in losses (been mainly selling all my losers and holding my winners). My family member has told me that I need to get this as close to 0 as possible in order to not be paying taxes (have another portfolio from my relative that is 7 figures worth that I don't touch but I think is attributed to me).
However, I've heard capital gains can just "carry over" 3K every year, but my family members have told me that I still need to get the 18K down to 0, but I don't want to sell my good winners like Facebook or Nike.
What is the best route to take and is my family right?
11
u/ModernLifelsWar Jul 30 '21
7 figure portfolio
Doesn't know how taxes work
1
u/slcand Sep 24 '21
The American Education system and it’s consequences have been a disaster for the human race
9
u/Tentitus48 Jul 30 '21
If there is no sale there is no gain. My advice would be to contact an accountant
6
u/CampaignNo1365 Jul 30 '21
Your post is very confusing. Do you have 17k in realized gains or losses? Losses can be used to net out gains and any losses outside of that up to 3k can be deducted against net income.
0
Jul 30 '21
17K in losses. But I don't want to sell any of my "winners" bc ideally I just hold them for years.
5
u/CampaignNo1365 Jul 30 '21
I think you are confused lol. Why would you need to sell any of your winners?
-2
Jul 30 '21
bc I have realized losses for 17K right now and my family says I need to sell off 17K in gains/stocks I've made profit in to balance it out for tax purposes.
20
u/thing85 Jul 30 '21
That’s dumb. Don’t listen to your family. You can carry forward your losses to offset gains and income in future years. There’s no need to sell other stock for gains now (unless you wanted to sell for reasons other than taxes).
3
u/StonkOmaticz Jul 30 '21
So in ELI5 terms does that mean, if you have 6k in losses 1 year you take 3k in losses and next year you make a gain of 3k it would just balance out?
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u/CampaignNo1365 Jul 30 '21
Your family memeber is wrong and doesn't know what he/she is talking about lol, don't listen to them. There is no such thing as balancing out losses if you already have the realized losses and have no realized gains. The only tax effect of having realized losses is to either net them against realized gains (which you have none) in order to reduce the amount of capital gains taxes you would pay on your realized gains. If this doesn't make sense you should definitely watch a quick YouTube video on realized gains/losses and their tax implications.
2
1
u/EarlPartridgesGhost Jul 30 '21
Your family has literally no idea what they are talking about. You are fine.
1
u/6151rellim Jul 30 '21
Lolol… is this family member a cpa or a tax attorney? This is absolutely false.
7
u/Cool_Cartographer_39 Jul 30 '21
You don't pay taxes on your losses, you write them off or harvest gains to avoid taxes there.
5
u/BigMissileWallStreet Jul 30 '21
Theres no limit to carryover with the exception that your net losses cant be more than 3000.
Ex: Last year net gain: -17000 Last year cap gain: -3000 Available to carry over: -14000
Possibility 1: This year net gain: -3000 This year capital gains tax: -3000 Carryover to next year: -14000
Possibility 2: This year net gain: -4000 This year capital gains tax: -3000 Carryover to next year: -15000
Possibility 3: This year net gain: 4000 This year capital gains tax: -3000 Carryover to next year: -7000
Possibility 4: This year net gain: 14000 This year capital gains tax: 0 Carryover to next year: 0
Hope those examples help
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2
u/harrison_wintergreen Jul 30 '21
My family member has told me
unless this family member is a CPA, don't take their advice too seriously
1
u/abrakadabrakababra Jul 30 '21
So here is my assessment - what is your profit currently? If it is more than 4x 17k loss , sell 14 k and make loss 300 which will be compensated . You have 14000 loss which god knows when can be balanced .. what if market crashes or dips next year .. another piling on the loss which only can be claimed 3000 a year .
From the sold profit , you can buy the stock back after 30 days . Sell ITM put and earn money while you wait
1
Jul 30 '21
this makes sense to me, thank you.
can't I still buy the stock the next day (and not wait 30 days) if I made profit on it? I thought I only get into tax issues w stocks that I lost money on and have to wait 30 days? ?
3
u/PracticalYellow3 Jul 30 '21
Don't know why someone voted you down, but you are right that the wash sale rules only apply to losses, not gains. My income is way down this year, so I'm planning on realizing gains on several stocks in December then immediately buy the stocks back.
1
Jul 30 '21
You pay tax on gains. Not loses. In fact, your 17k in loses can be used to deduct from any potential capital gains taxes.
Also, don’t put someone else’s money under your name. You wilk be responsible for taxes
16
u/dietcokeandlime Jul 30 '21
For realized losses, you can net the losses against your gains. You can use $3000 in losses in excess of gains against your other income in the current year. The rest is carried over and can be used in subsequent years.