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Gold/Mining/Energy : Big Dog's Boom Boom Room -- Ignore unavailable to you. Want to Upgrade?

To: Tommaso who wrote (40921)	3/28/2005 10:19:45 AM
From: kodiak_bull	Read Replies (5) \| Respond to of 206319

A little tax rate thinking here: You bought BRY at $33.00 in the summer, let's say 1,000 shares, so you paid $33,000. When it hit $66.11 you say you had a 100% gain, so the value of the position was $66,000. You could have sold with a 4% trailing stop loss at $63,360, for a 92% gain, or $30,360 in gain. Assuming you would have to pay 30% of that gain in capital gains taxes, that would have cost you $9715.20, leaving you $20,644.80, or an after tax gain of about 63%. (A lot of tax maneuvering can be done, of course, to balance out a March sale of stock against other positions, even taking capital losses on dividend producing stocks, etc., at year end, but let's not get too complicated here.) Instead, you have held on to a falling stock (current price: $49.30) to see an erosion of $16,810 in your account (66.11 minus 49.30 X 1,000 shares). You have given back to the market 50% of your gains, in order to try to hold on for a 15% federal capital gains tax, or in order to only pay 15% on 16,190, or $2,429 in taxes. Now, let's put this all together. If the stock simply flatlines here, you will, in the end have $13,761.50 in your account (gain of $16,910 x 85% retention rate), instead of the $20,644.80. Your gain here is now down to 41.7% on the position. We're at some support here so it might hold. Otoh, the next level of support is down at about $38.50, which would give you a $5.50 gain before a 15% CG tax. In other words it would turn your $20,000 after tax gain into a $4,675 gain, now down to 14.2%. Next support is down there at about 29.60 which, of course, would be a loss. But, wait, that might be good news, because you've cut your tax rate from 30% to 15% to zero. Am I getting it now? I must be missing something here about how smart it will be to wait for a 15% tax rate. Can you help me here? Kb