Oh ok... so it sounds like it was sort of out of your hands anyway? Rather than "waiting too long" (although I see what you're trying to say)?mathjak107 wrote:it was a real estate holding that had the gains . it had to be sold all at once and it had no offsetting loses since it was a few hundred k . our senior partner gets to decide when it is sold not me .moda0306 wrote:Had you engaged in enough loss-harvesting to have a sizable loss-carryover?mathjak107 wrote:yep , i can be the poster child for that . i delayed 1 extra year and got hammered
If so, it should have eaten up a good chunk of your gain. If not, it would appear your problem wasn't loss-harvesting, but refusing to harvest gains in modest chunks approaching a large cash-need and then doing it all at once.
I probably should've been clear that just because I advocate loss-harvesting doesn't mean you ignore sizable unrealized gains. You almost never want to blindly put yourself in any position where your AGI will rise significantly for one year. Is there something that caused you to have to liquidate such a large position?
Loss harvesting doesn't work all that well if you actually need to liquidate the gains shortly thereafter (especially since it's limited to $3,000 per year), but even then, you not only gain the timing element, but you harvest the loss as an ordinary loss, but usually recognize a long-term capital gain... so even with a strong hike in cap gain rates, one would often benefit from the arbitrage, depending on their ordinary tax rate. But that's only if it's a small loss compared to small gains. If you have a small loss next to BIG gains, along with a democrat pushing tax hikes, then gain harvesting can become more important than loss harvesting (esp if you'll need that money soon).
Also, low ordinary brackets can be harvested in a number of ways, one of which is doing sizable Roth conversions. This will also have the affect of lowering RMD's later in retirement, so I usually recommend using that as the main mechanism to "harvest" low brackets.
This all probably makes no sense to y'all or I'm missing some key aspect.
My other question... would you have had the ability through reduction in other sources of passive income (mainly, distributions from IRA's), to lower your other income to keep your AGI smoother than year? Or were you pretty much stuck realizing the taxable income that year that you were?
Big bumps in AGI suck. :/ Unfortunately, that makes "fixed taxable income that I don't need right now" also kind of suck when you have a huge capital gain that is all going to be recognized in one year. But you know that by now I suppose!