I guess the theory goes, that the big winners of last year; MSFT, DELL, CSCO, ASND, etc, will see profit taking with no tax implications for an entire year
Makes sense, except for one thing:
Scenario A: Sell Dec. 31 and trigger $50K cap gain for 1998. So you have to make your quarterly estimated tax payment for Q4 1998. I believe it's on Jan. 15, meaning you send in your $15K (approx. 35% short-term cap gain rate) on January 15.
Scenario B: Sell Jan. 4, 1999. Send in quarterly estimated tax payment for Q1 1999 on April 15, 1999. File tax return on April 15, 2000, but you don't owe additional tax beyond what you paid a year before.
Assuming my understanding's correct that you DON'T get to wait until April 2000 to send in the tax payment, except for measly little gains triggering liability that doesn't deviate more than 10% from actual owed tax, then most people would delay payment by only three months by waiting until January. |
