Cutting Capital Gains

Capital gains tax rates are low and you can still take steps to reduce this even more.

Say you made three seperate purchases of the same stock-120 shares @ $10/share, 100 shares @$12/share and 150 shares at $20 share . Under the assumption that you can sell 120 share now at $40 a share. If you did not tell your Broker which purchases to sell, the IRS will consider that you sold the first $10/share purchase and you will be taxed on a $30/share gain

To avoid this problem tell your Broker to sell the 120 shares of stock you bought at $30 so yout taxable gain is $10. However in this downturn market and you have many losses to offset this you may want to sell the shares you bought at $10/share

Make a charitable contribution off appreciated securities

If you have owned a stock for more than a year once you donate it to charity , you can deduct it full market value as a charitable contribution. NB property given to charity is subject to AMT

Offset gains with losses

If you have a large capital gain you may want to consider selling your stock at a loss. You can deduct up to $3000 per year in capital losses from ordinary income but there is no limit to the capital losses you can use to offset capital gains.

Sell in the right year

If you will be in a higher tax bracket next year then sell your stock the current year. However if believe you will be in a the same tax bracket next year , you may be better off selling in a later year and deferring the tax on your gain