Question

Calvin, a client of yours since you opened your practice, has over the past few years become very intrigued by investing in the stock market. He has interest-bearing securities and dividend-paying stocks. He also owns U.S. Securities. He is considering selling $400,000 in stocks. He doesn’t know if he should sell additional stock for a loss to help offset the stock sale of $400,000. Calvin called you to ask what tax consequences the interest and dividends will have along with the stock sale. What tax advice would you offer to Calvin in planning for this situation?

Answer 1

Interest financial gain from investments is typically treated like normal financial gain for federal tax functions.

Use tax-shielded accounts. If you are saving cash for retirement, and do not need to pay taxes on dividends, think about gap a Roth IRA. You contribute already-taxed cash to a Roth IRA. Once the cash is in there, you do not need to pay taxes as long as you're taking it get into accordance with the principles.

If you reinvestment dividends, you get further shares with the dividend, instead of take the money. Profit reinvestment will be a prudent approach as a consequence of it's low-cost as a result of reinvestment is automated, you will not owe any fees or various brokerage charges once you acquire extra shares.

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