Avoid gain on older stocks. One of my new clients, Serena Stockholder, is a Federal Express employee and loves to buy Federal Express stock. As a result, she has stock that has been purchased over a number of years.

One day as we sat and reviewed her tax return, which I was preparing, she bemoaned the fact that she needed to sell some of that stock but the older purchases had low costs so she figured she was going to have to pay some capital gains taxes. I tipped her off on two easy ways to lower that gain. Read more.

First, normally the first-acquired shares are treated as sold first. However, if you identify the shares sold, you can select the shares with the highest cost to minimize gain. For this to work, you must tell your broker and get confirmation of what shares to sell receive in writing. You may also issue a standing order to always sell the stock with the highest basis.

Second, under a little-known rule, if she contributed appreciated shares with a low basis to her favorite charity, she would be entitled to deduct the current value of the stock and would not have to pay any taxes on the gain.

My Advice: It is almost always a good time to make an appointment with me and do a little tax planning. Had Ms. Stockholder sold her stock without knowing what I told her, she would have paid way too many taxes. The best thing to do is to send me your most recent tax return and let me put Tax Mastery© to work. That way you can assure that you pay the least legal taxes in 2017. If you are considering any significant transactions, I can use my Proseries software to tell you exactly what your 2017 taxes will be and how we can reduce them. If you are not yet a tax client, you are entitled to a *Free 1/2 hour Consultation.*

Next Wealthwise: I will tell you how to avoid the passive activity loss (PAL) rules without being a real estate professional. Hint: most Airbnb hosts avoid PAL.

About Wis Laughlin

I help clients with tax preparation and IRS representation, estate planning, and complex contracts, including LLC's. As a former IRS tax attorney in their National Office. picked Wis in 2017 and several prior years as one of the Top Tax and Estate Lawyers in Tennessee. I am your advocate, not your accountant. I don't tell you what you can't do. I show you how to do it.
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