LTCG Strategy - Isn't this a good idea

[roninshawneeKS]

Tax Guys-

The Question: EVERY YEAR, as a matter of strategy, shouldn't a person with LTCGs strive to take advantage of the 0% tax on the first $47,000 of LTCGs taxed at 0%.

Given a lot of other situations along with this question (number and amount of LTCGs you have, need for the money, timing, IRMAA, etc. etc.) - in general, isn't the above strategy for reducing your taxes at a later date a good idea.

For instance, say you had thousands (which I don't) of shares of Apple stock held for many years with large LTCGs - you can sell some of it (i.e. $47,000 of 0% Gains-worth) and then turn around and buy it back with no cost and no other effect on your taxes, can't you.

Sorry, but it has taken me a long time to figure this out and am just looking for a little verification here that this is a good strategy - wanting to avoid the "consult with your own attorney response" if I ask this question elsewhere - because I know there are a lot of smart tax guys out here in this Community.

ron in shawnee

[Bsch4477]

Yes, that works as long as your taxable income stays below that level but remember that the profit on the sale is included in your taxable income and that could push you over that threshold. 
You also have to consider whether you have a state tax since most states don’t tax capital gains preferentially. 

[Mike9241]

It doesn't work that way unless your only income is LTCG and Qual Div. First other income is taken into account. then LTCG and Qualified dividends are added to determine what tax bracket they fall into

for example a single person using the standard deduction with about $53,000 in other income and $47,000 of LTCG/Qual dividends would pay 15% tax on about $38,000 of that $47,000

[roninshawneeKS]

Champ-

Thanks for the response - I knew it wasn't as simple as I thought.

Thought I understood your response, at first - but let me soak it in - and will probably get back to you for more clarification.  (Haven't quite got it figured out yet, to the point of fully understanding how it works.)

ron in shawnee

[dmertz]

The LTCG income sits on top of your other income.  The tax bracket into which it falls depends on your total income, not just your LTCG income.  If for 2024 you file as single, your LTCG will remain in the 0% tax bracket if your total taxable income does not exceed $47,025.  If you have $47,025 or more of taxable income without the LTCG, all of your LTCG will fall above the 0% LTCG tax bracket.  If you have less other income than that but when the LTCG is added it totals more than $47,025, some of the LTCG will be taxed at 0% and some will be taxed at 15%.  (If you have enough LTCG to bring your total taxable income to more than $518,900, some of the LTCG will be taxed at 20%.)