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Post by tingtongtung on Dec 6, 2017 13:57:56 GMT -5
I am not sure what the status is at the moment, but I recall reading that the Senate version of the tax bill changes the rules for recognition of gains and losses on securities held for investment. At present you can identify particular share certificates, particular share lots, LIFO, FIFO, or the average cost method. The proposed rule makes FIFO mandatory for both gains and losses. If you have large unrealized gains or losses you might want to crank through the math to see how the law change would apply to you if you don't take action before December 31. The proposed law retains the 30-day wash sale rule so be aware of that as well. Note that this was proposed law in one version of the tax bill, but I believe this change made it into the final version. If you have many layers of investments at many different price points, you might want to do a bit more homework, and do so very soon as Congress has a nasty habit of making committee modifications retroactive to the effective date (i.e. the date the bill is signed or is referred to the president for signature). In other words, you may have just a few days to act instead of until December 31. I know its off-topic.. What are the chances of this (only FIFO) going thru? What exactly is being accomplished by this crazy rule? Just when the rule of brokerages providing the cost basis became the norm (which is good), a new crazy rule.. I have so much losses here (I sold some about a month before approval for 5 digit losses (only about 40% of total :-( ), got in and out after approval to make some money, and again bought some for longer term).
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Post by seanismorris on Dec 6, 2017 14:02:16 GMT -5
I don’t expect anything significant to happen in January.
So, if you want to sell and buy back the shares in February that would make sense.
You might be fighting the technicals, but I think the tax benefits would more than offset that.
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Post by boca1girl on Dec 6, 2017 14:11:17 GMT -5
I am not sure what the status is at the moment, but I recall reading that the Senate version of the tax bill changes the rules for recognition of gains and losses on securities held for investment. At present you can identify particular share certificates, particular share lots, LIFO, FIFO, or the average cost method. The proposed rule makes FIFO mandatory for both gains and losses. If you have large unrealized gains or losses you might want to crank through the math to see how the law change would apply to you if you don't take action before December 31. The proposed law retains the 30-day wash sale rule so be aware of that as well. Note that this was proposed law in one version of the tax bill, but I believe this change made it into the final version. If you have many layers of investments at many different price points, you might want to do a bit more homework, and do so very soon as Congress has a nasty habit of making committee modifications retroactive to the effective date (i.e. the date the bill is signed or is referred to the president for signature). In other words, you may have just a few days to act instead of until December 31. I know its off-topic.. What are the chances of this (only FIFO) going thru? What exactly is being accomplished by this crazy rule? Just when the rule of brokerages providing the cost basis became the norm (which is good), a new crazy rule.. I have so much losses here (I sold some about a month before approval for 5 digit losses (only about 40% of total :-( ), got in and out after approval to make some money, and again bought some for longer term). I believe that the FIFO change will accelerate the government’s tax revenue collection. The stock market has been on the rise for almost 10 years, so the assumption is that shares purchased years ago will produce the biggest capital gains when sold.
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Post by mytakeonit on Dec 6, 2017 14:20:51 GMT -5
... Or crash and burn. You left out the ending. I don't worry about offsets ... I'll just wait till it's at $100 per share ... then I won't care. BTW, the IRS is definitely understaffed and probably won't notice it. Unless you're the unlucky one. Ha! I had 3 amendments sent to me by 3 different IRS agents for my last year's tax return. First I had money sent to me because I did something wrong ... then, the second amendment said that I owed money because of an error ... the last amendment was the best because it included a penalty because I was over the $5k limit due to the first amendment change. Ha! My return ended up where I originally filed ... except for the penalty. Small penalty so I'm not going to say anything and start the snowball rolling again. And, I'm an accountant who is saying this. Ha!
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Post by jonny80s on Dec 6, 2017 14:54:48 GMT -5
I think the 'possible' new rules really extend to day traders and big boys. Because they are going to make you sell your last in shares rather than being able to pick and choose which lots to sell from. That way there will be more short term tax hits (averaging up vs. averaging down). Unless I completely misinterpreted it.
All in all.. it simply changes the trading strategy ever so slightly.
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Post by jonny80s on Dec 6, 2017 14:56:54 GMT -5
Ohh... fidelity did the math for me... 21.6K loss minus 1.4K in disallowed loss for a net 20.2K loss.
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Post by buyitonsale on Dec 6, 2017 15:37:24 GMT -5
One can always buy first, even on margin, and then sell same amount of FIFO shares at a loss to offset other gains, thus keeping same amount of shares invested But if you're doing this to record a loss on your FI shares, just make sure that when you decide to sell the first in shares at a loss, that it is 31 days or later after your buy. Otherwise, the loss will be disallowed. A lot of investors focus on the 30-day rule only in the context of selling first and re-buying, but it also applies to buying first (last in) and then selling the first in shares - your loss will still be disallowed. Sorry, my bad, I did not know that the rule also applies to buying shares within 30 days BEDORE the loss sale... Perhaps the rules changed from the last time I researched it... Here is a pretty current article from Schwab on wash sales: www.schwab.com/resource-center/insights/content/a-primer-on-wash-sales
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Post by mytakeonit on Dec 6, 2017 20:41:18 GMT -5
BTW ... for all you tax worriers. If you don't know why I'm going to will my MNKD shares to my daughter ... it's because of the tax law on inherited shares.
It doesn't matter what my shares cost me so far ... whether it be $5 ... $10 ... $100 per share. My daughter's share basis will be the price of MNKD shares when she inherits it. I expect MNKD share price to really be flying soon ... hopefully before I die. If MNKD share price is $1M when I die ... that will be her basis. WOW!
Guess for her sake ... I better stop eating this bag of Cheetos. Ha!
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Post by boca1girl on Dec 6, 2017 20:56:27 GMT -5
BTW ... for all you tax worriers. If you don't know why I'm going to will my MNKD shares to my daughter ... it's because of the tax law on inherited shares. It doesn't matter what my shares cost me so far ... whether it be $5 ... $10 ... $100 per share. My daughter's share basis will be the price of MNKD shares when she inherits it. I expect MNKD share price to really be flying soon ... hopefully before I die. If MNKD share price is $1M when I die ... that will be her basis. WOW! Guess for her sake ... I better stop eating this bag of Cheetos. Ha! That’s current law. I heard (on CNBC) that the step up cost basis was at risk also, so maybe it doesn’t matter how many of those Cheetos you eat.
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Post by mytakeonit on Dec 7, 2017 1:01:09 GMT -5
Ha Ha ... maybe so. But, how many politicians do you think will vote for something that will jeopardize their situation. But maybe ... they don't think they'll ever die. Or worse, they plan on spending it all before they die. Anyway, we'll see where we are when the dust settles. I never worry about these things ... just know the rules and play accordingly. I'll follow Trump when he goes thru the loopholes.
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Post by kball on Dec 7, 2017 8:27:26 GMT -5
BTW ... for all you tax worriers. If you don't know why I'm going to will my MNKD shares to my daughter ... it's because of the tax law on inherited shares. It doesn't matter what my shares cost me so far ... whether it be $5 ... $10 ... $100 per share. My daughter's share basis will be the price of MNKD shares when she inherits it. I expect MNKD share price to really be flying soon ... hopefully before I die. If MNKD share price is $1M when I die ... that will be her basis. WOW! Guess for her sake ... I better stop eating this bag of Cheetos. Ha!That’s current law. I heard (on CNBC) that the step up cost basis was at risk also, so maybe it doesn’t matter how many of those Cheetos you eat.Some years back i had a spirited discussion/argument with a new girlfriend about the better Cheeto. Crunchy or Puffy? I was strongly in the Crunchy camp. She was dismissive and just as firmly in the Puffy camp. Looking back, the writing was on the wall
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Post by sportsrancho on Dec 7, 2017 10:00:34 GMT -5
That’s current law. I heard (on CNBC) that the step up cost basis was at risk also, so maybe it doesn’t matter how many of those Cheetos you eat.Some years back i had a spirited discussion/argument with a new girlfriend about the better Cheeto. Crunchy or Puffy? I was strongly in the Crunchy camp. She was dismissive and just as firmly in the Puffy camp. Looking back, the writing was on the wall I totally agree, the signs are there right from the beginning! Lol
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Post by matt on Dec 7, 2017 11:15:13 GMT -5
I am not sure what the status is at the moment, but I recall reading that the Senate version of the tax bill changes the rules for recognition of gains and losses on securities held for investment. At present you can identify particular share certificates, particular share lots, LIFO, FIFO, or the average cost method. The proposed rule makes FIFO mandatory for both gains and losses. If you have large unrealized gains or losses you might want to crank through the math to see how the law change would apply to you if you don't take action before December 31. The proposed law retains the 30-day wash sale rule so be aware of that as well. Note that this was proposed law in one version of the tax bill, but I believe this change made it into the final version. If you have many layers of investments at many different price points, you might want to do a bit more homework, and do so very soon as Congress has a nasty habit of making committee modifications retroactive to the effective date (i.e. the date the bill is signed or is referred to the president for signature). In other words, you may have just a few days to act instead of until December 31. I know its off-topic.. What are the chances of this (only FIFO) going thru? What exactly is being accomplished by this crazy rule? Just when the rule of brokerages providing the cost basis became the norm (which is good), a new crazy rule.. I have so much losses here (I sold some about a month before approval for 5 digit losses (only about 40% of total :-( ), got in and out after approval to make some money, and again bought some for longer term). If a former life I was a full-time tax professional, although focused mainly on international taxation of multi-national corporations. The only way to know what is in a pending bill is to get the latest mark-up from the Congressional Register and read it, and that is beyond the ability of all but the most masochistic tax lawyers. From what I know, and admittedly I have not read the latest markup, this provision is still in the bill and based on my experience I would say that it is likely to make it into the joint committee reconciliation version. Likely = educated guess, not fact. Since most stocks tend to increase in value, forcing all taxpayers to use FIFO will increase revenue to the US Treasury since first-in shares tend to have a lowe tax basis. This provision partially off-sets the revenue declines buried elsewhere in the tax reform provisions. Remember that the Senate has rules that require budget neutrality in any tax legislation even though they manage to break that rule on a regular basis regardless of which party is in the majority. As there is no appetite to increase the deficit on either side of the aisle, I expect the final bill will contain the FIFO requirement. The IRS likes the FIFO requirement because they really don't have a good way to track the original tax basis of shares accumulated over time, and this is especially so if a company has gone through mergers, spin-offs, splits, reverse splits, and so on. If everybody has to use FIFO, then the IRS can easily build a database of all stock transactions so they will know exactly what your basis should be as a way to detect cheating. This is one of the last unplugged loopholes that wealthy individuals take advantage of on a regular basis, and with the individual AMT going away as part of reform, they want to be able to collect every penny they can from wealthy taxpayers.
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Post by silentknight on Dec 7, 2017 12:13:11 GMT -5
I know its off-topic.. What are the chances of this (only FIFO) going thru? What exactly is being accomplished by this crazy rule? Just when the rule of brokerages providing the cost basis became the norm (which is good), a new crazy rule.. I have so much losses here (I sold some about a month before approval for 5 digit losses (only about 40% of total :-( ), got in and out after approval to make some money, and again bought some for longer term). If a former life I was a full-time tax professional, although focused mainly on international taxation of multi-national corporations. The only way to know what is in a pending bill is to get the latest mark-up from the Congressional Register and read it, and that is beyond the ability of all but the most masochistic tax lawyers. From what I know, and admittedly I have not read the latest markup, this provision is still in the bill and based on my experience I would say that it is likely to make it into the joint committee reconciliation version. Likely = educated guess, not fact. Since most stocks tend to increase in value, forcing all taxpayers to use FIFO will increase revenue to the US Treasury since first-in shares tend to have a lowe tax basis. This provision partially off-sets the revenue declines buried elsewhere in the tax reform provisions. Remember that the Senate has rules that require budget neutrality in any tax legislation even though they manage to break that rule on a regular basis regardless of which party is in the majority. As there is no appetite to increase the deficit on either side of the aisle, I expect the final bill will contain the FIFO requirement. The IRS likes the FIFO requirement because they really don't have a good way to track the original tax basis of shares accumulated over time, and this is especially so if a company has gone through mergers, spin-offs, splits, reverse splits, and so on. If everybody has to use FIFO, then the IRS can easily build a database of all stock transactions so they will know exactly what your basis should be as a way to detect cheating. This is one of the last unplugged loopholes that wealthy individuals take advantage of on a regular basis, and with the individual AMT going away as part of reform, they want to be able to collect every penny they can from wealthy taxpayers. I would agree that the bolded statement generally holds true, but not for MNKD. If I sold stock today on a FIFO basis, I'd take an approximately $24 per share loss if I sold my shares that were picked up before the FDA approval. FIFO for MNKD would be profitable for those that purchased when the stock was under $1.00 but for most of us longs, FIFO would be devastating.
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Post by mytakeonit on Dec 7, 2017 12:43:51 GMT -5
Silent ly I say ... WOW ... MNKD is really taking care of us! AND, I finally agree with silentknight ... Ha!
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