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#1
09-21-2005, 06:32 AM
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 Re: Long vs Short term gain anomaly JoeTaxpayer <JoeTaxpayer[at]nospam.com> wrote: - quote - > This is the first I've ever discovered this;
Margin interest perhaps?> While playing with TurboTax and planning some stock sales, I > found that a long-term gain of $10,000 produced a net tax > owed of $2150, but for curiosity, I flipped the buy date to > look short term and the ammount owed dropped to $138. I > understood the longterm gain might trigger AMT, and I was ok > with that, but the short term triggered some interest > deduction I've carried forward for some time now. So this > prompts my question; > I understand that it's usually beneficial to use the carried > interest expenses (margin interest) for the short term > gains, but clearly that's not my case. I have no short term > anything, just long term gains in the portfolio. Am I > permited to treat a sale as short term to force the use of > carried interest to be allowed? Is this IRS related, or the > software trying to spare me a bad decision? One thing that could happen is you are limited to not claiming more investment interest deduction than your investment income. If you claim qualified dividends and long term gains, you cannot use that as investment income. But you can elect to not claim qualified dividends and/or long-term favored tax rates on long-term gains, and that lets you include that in the amount of q.d and long term gain as investmment income needed to match investment interest expense. Example: Investment interest = 1000 Only invstment income is L-T Gains = 1000 If you claim the L-T gains favored tax rate you cannot take the 1000 investment interest deduction currently. If you choose to not take advanatge of the favored L-T Gain rates, then the entire 1000 investment interest can be used currently. __ Art Kamlet ArtKamlet [at] AOL.com Columbus OH K2PZH << ================================================== ===== > << The foregoing is intended for educational purposes only > << and does NOT constitute legal OR professional advice. > << > << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org. > << Copyright (2005) - All rights reserved. > << ================================================== ===== > |
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09-21-2005, 05:54 AM
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| Re: Long vs Short term gain anomaly JoeTaxpayer <JoeTaxpayer[at]nospam.com> writes: - quote - > This is the first I've ever discovered this;
[snip]> While playing with TurboTax and planning some stock sales, I > found that a long-term gain of $10,000 produced a net tax > owed of $2150, but for curiosity, I flipped the buy date to > look short term and the ammount owed dropped to $138. I - quote - > understood the longterm gain might trigger AMT, and I was ok
That doesn't surprise me. Long-term gains aren't> with that, but the short term triggered some interest > deduction I've carried forward for some time now. considered "investment income" for purposes of having the necessary "investment income" to deduct "investment expenses" against it. - quote - > I understand that it's usually beneficial to use the carried
Yes. See Form 4952 and its instructions.> interest expenses (margin interest) for the short term > gains, but clearly that's not my case. I have no short term > anything, just long term gains in the portfolio. Am I > permited to treat a sale as short term to force the use of > carried interest to be allowed? -- Rich Carreiro rlcarr[at]animato.arlington.ma.us << ================================================== ===== > << The foregoing is intended for educational purposes only > << and does NOT constitute legal OR professional advice. > << > << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org. > << Copyright (2005) - All rights reserved. > << ================================================== ===== > |
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#-1
09-20-2005, 02:51 PM
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| Long vs Short term gain anomaly This is the first I've ever discovered this; While playing with TurboTax and planning some stock sales, I found that a long-term gain of $10,000 produced a net tax owed of $2150, but for curiosity, I flipped the buy date to look short term and the ammount owed dropped to $138. I understood the longterm gain might trigger AMT, and I was ok with that, but the short term triggered some interest deduction I've carried forward for some time now. So this prompts my question; I understand that it's usually beneficial to use the carried interest expenses (margin interest) for the short term gains, but clearly that's not my case. I have no short term anything, just long term gains in the portfolio. Am I permited to treat a sale as short term to force the use of carried interest to be allowed? Is this IRS related, or the software trying to spare me a bad decision? JOE (Beer Competition??? I'm hanging with the wrong crowd.... I hope you won!) << ================================================== ===== > << The foregoing is intended for educational purposes only > << and does NOT constitute legal OR professional advice. > << > << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org. > << Copyright (2005) - All rights reserved. > << ================================================== ===== > |
| Tags |
| anomaly, gain, long, short, term |
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