Presuming writing off losses is a non issue....
Tax is still the same on the total gain in the end.
So whether you sell your worst shares for break even now or for high profit later, or the best gains now or losses later, you still only pay tax (the same tax) on the total profit made.
There is no maneuvering you can make with high cost vs low cost shares, now or later, to reduce taxes on total gains. If you make money that total is taxed.... whenever it happens.
Just be glad to make money at all in this rigged market, and pay taxes happily cause it means you are a winna'!!!
Check this out, explains it way better than I can on how you can manipulate your transactions to favor you in certain situations. This is what I have been doing with my sell brackets. Its a way of protecting my $$$ from my initial sell order in case the play doesnt pan out but at least I get a fill through my first bracket. So lets say GTII goes to $5, never reaches $8 instead tanks all the way back down to $2, at least I recovered lets say $10k from that sale and I dont own any taxes on it, all I have from the transaction is the tax write off. No taxes to pay at all since the shares I sold gad a cost basis above $5 from when I purchased them. Im not going to owe taxes a 1000 shares of GTII I purchased at $5.25 if I sold them for $5 even if my overall GTII bag had 5000 shares, that is only if I selected those specific shares on my brokerage account to be available for sale.
See below. If there is something Im really missing or not getting let me know, but this is how I understand it. In the end if taxes were 50% Im putting myself in a position where if I sell $10k in GTII at a $5 max bracket and the play doesnt pan out as I thought it would and hit my next bracket, I get to keep the full $10k rather than be stuck with only $5k and on top of that and the rest of my shares at some point would sell at cheaper prices anyways and I adjust accordingly based on other factors should it benefit me.
Specific-Shares Method
- The specific-shares method is a way for individual investors to manipulate their capital gains or losses when selling some, but not all, of their shares of a particular stock.
- The goal of the specific-shares method is to reduce tax liability in a given year by showing as large a loss or as small a gain as possible.
- The specific-shares method can minimize the size of a capital gain, or maximize the size of a capital loss, for tax purposes, when selling off shares.
- Selling the shares with the highest cost basis (the shares for which the investor paid the most), shows a smaller capital gain or a greater capital loss, reducing tax liability for a given year.
- The specific-shares method requires that the investor has purchased multiple lots of the same security at different prices, is selling only some of the investor’s shares in a stock, and has kept a record of the cost basis of each stock.
Understanding the Specific-Shares Method
By
James Chen
Updated August 31, 2022
Reviewed by
Lea D. Uradu
Ivestopedia
The specific-shares method can minimize the size of a capital gain or maximize the size of a
capital loss, for tax purposes, when selling off shares of a company or fund. It works by choosing to sell specific shares when reducing one’s position in a stock. Selling the shares with the highest
cost basis (i.e., the shares the investor paid the most for), will show a smaller capital gain or a greater capital loss, in either case reducing tax liability for a given year.1
The specific-shares method only works if certain conditions are met. The method requires that the investor has purchased multiple lots of the same security at different prices, is selling only some of the investor’s shares in a stock, and has kept a record of the cost basis of each stock or fund purchase.
Assuming all these conditions, the investor must give detailed information to the
broker managing the investor’s account on which shares to sell. Otherwise, the average price paid for all shares of the same stock will form the cost basis, and the investor will end up with a greater tax liability than necessary.
Choices Within the Specific-Shares Method
Though it is generally in the investor’s interest to choose the highest-cost shares to sell in the specific-shares method, there are exceptions. If the highest-cost shares were purchased within the last year, choosing to sell them in the specific-shares method would count as a
short-term capital gain, which is taxed at income-tax rates, rather than the lower
capital gains rate.1 In such a case, the investor would choose the highest-cost shares among those purchased a year ago or more.
Another situation in which an investor would deviate from the typical strategy occurs if the investor’s taxable income including
long-term capital gains falls under a certain threshold. In 2021, the number is $40,000 for individuals and $80,000 for joint filers.
Though it is generally in an investor’s interest to choose the highest-cost shares to sell in the specific-shares method, there are exceptions.
Under that threshold, long-term capital gains incur no tax.2 In that case, the investor may choose to specify shares with the lowest cost basis in order to maximize the gain on paper and take the greatest advantage of the 0% tax rate, leaving the highest-cost shares in the portfolio to be specified when it is most beneficial.