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Gold/Mining/Energy : Strictly: Drilling and oil-field services
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To: Big Dog who wrote (4639)12/8/1997 9:08:00 PM
From: Thean  Read Replies (4) of 95453
 
Let's talk about year end tax situation. This is a topic we have not discussed much about. The question for me is now that I'm sitting on some gains, shall I hold them till January? We have 23 days to go till the calender year is close out. Roughly 1/3 of any gain made now will go to Uncle Sam on April 15 - about 4 months from here.

This is a hypothetical scenario. I have a 10% gain. If I take profit now, I take that 10% but owe Uncle same about 1/3 of of my gain due 4/15. If prices continue to move up and assume I buy back at the same price immediately,

1. If on Jan 1 the stock price remains the same as when I sold, I lose because of tax liability due 1 year earlier.

2. If on Jan 1 the stock price decreases, then depends on the % decrease I may come out on top.

3. If on Jan 1 the stock price increases, then I lose again because I have to pay tax 1 year earlier.

Based on this scenario, the only way to guarantee that I come out on top is if I can sell and buy at a much lower price (e.g. 3-5% lower) between now and Jan 1.

I really hope prices remain stable and move sideway from here. The closer we are to Jan 1, the better will be for those who hold. Typically prices should remain stable between Christmas and New Year because traders are gone after 23 or 24.

Thoughts on this anyone?
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