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Message: Capital Gains Tax

Capital Gains Tax

posted on Oct 31, 2008 10:14AM

I'm sure everyone is aware of this, but just in case a youngin out there might not be, maybe Thekid37...here's how to beat the system. Well, a little bit that is.

20% of my EDIG shares are in a brokerage account subject to cap gains and 80% in an IRA along with many other positions. After rolling my 401K to an IRA, I began moving the money to mutual funds, ETF's, individual stocks, bond funds etc, and a pot full of EDIG over the last 5 months to get my avg waaay down.

Assuming EDIG goes to the moon, I'll take my lumps from the brokerage acct, but cap gains does not apply within the IRA. As distributions are taken from the IRA over time, Fed & State tax applies based on ones tax bracket and that's it.

Also, if you are not yet ready to role a 401K, keep in mind you can fund an IRA right now, today, for $6,000 (such as Fidelity) assuming you are still working or your spouse is working and you are not (the rules vary) and the IRA will open in 2-3 business days with the money going into a cash fund at 1st, then you use it to buy EDIG shares. If you and a spouse both do this in 2008 at $6K/each at 15 cents, you'll have about 80,000 more shares. Plus, you receive a great tax benefit when filing 2008 next year.

Talk to your tax person for details and decide...Capish?

I confirmed my thoughts with my CPA and she said, "GO FOR IT."

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