Year-End Tax Planning Tip: Minimize Tax on Capital Gains

Year-end is creeping up on us and there’s no time like now to begin tax strategizing for your 2017 returns!

Tax Tip: Minimize Tax on Capital Gains. Generally, when you sell stock or mutual fund shares, the shares you purchased first are considered sold first. That’s usually good news since it’s often beneficial to qualify for the lower long-term capital gain rate by selling shares that have been held more than one year. If you are selling less than your entire holding of a specific stock or mutual fund, there may be situations where you’re better off selling shares other than those that have been held the longest. For example, the newer shares may have a higher cost basis (because you paid a higher price for them) which would result in a smaller taxable gain or even a loss that can be netted against the gain. When you want to sell shares other than those you purchased first, you must properly notify your broker as to the specific shares you want sold.

For more year-end tax tips for individuals please click here.

Davis & Hodgdon Associates CPAs has been assisting individuals and business owners with tax consulting and strategizing for more than 25 years. Please call us at (802) 878-1963 (Williston) or (802) 775-7132 (Rutland) if you have any questions or if you would like to set up a strategy meeting to discuss your unique tax planning needs prior to December 31.