Capital Gains Harvesting & Management
Strategically Realize Gains at Optimal Tax Rates
Capital gains harvesting involves intentionally realizing capital gains when you're in a low tax bracket, such as during retirement, sabbatical years, or business downturns. By taking gains in years with low ordinary income, you may pay 0% or 15% on long-term gains instead of 20% plus 3.8% NIIT in higher-income years. This strategy can also reset cost basis and provide tax-efficient portfolio rebalancing.
See Your Potential Savings
Based on a typical client profile for this strategy
Real Results: Client Success Story
"A married couple in early retirement has $90,000 taxable income (below the $94,050 threshold for 0% LTCG rate). They harvest $50,000 in long-term gains at 0% federal rate, resetting basis for future sales."
*Illustrative scenario for educational purposes. Tax savings depend on individual circumstances, income level, entity structure, and proper implementation. Consult with a tax professional to determine eligibility.
Do You Qualify? Quick Self-Assessment
This strategy may be right for you if:
Check 3 or more? You may be a good candidate for this strategy. Schedule a free consultation to calculate your potential savings.
Investment Levels
- Current situation analysis
- Tax reduction opportunities
- Action item roadmap
- Follow-up summary
- Full financial analysis
- Multi-year projections
- Entity optimization
- Implementation support
- Quarterly planning calls
- Transaction review
- Legislative updates
- Priority access
- Structure analysis
- Document preparation
- IRS filings
- Transition planning
Related Strategies
Explore the Details
For those who want to understand the full picture
Real-World Example: Before & After
A married couple in early retirement has $90,000 taxable income (below the $94,050 threshold for 0% LTCG rate). They harvest $50,000 in long-term gains at 0% federal rate, resetting basis for future sales.
BEFORE Strategy
AFTER Strategy
$50K gains at 0% vs. future 23.8% (20% + 3.8% NIIT) = $11,900 saved. Immediately repurchase (wash sale rule applies to losses, not gains) to reset basis. Future appreciation starts from higher cost basis.
IRS Authority & Professional References
Key Benefits
- 0% rate for gains below income thresholds
- 15% rate for middle-income taxpayers
- Avoid 3.8% NIIT in lower-income years
- Reset cost basis for future sales
- Tax-efficient portfolio rebalancing
- Reduce future gain on same securities
Requirements & Risks
Requirements:
- •Taxable income low enough for favorable rates
- •Long-term holding period (>1 year)
- •Securities in taxable accounts (not IRAs)
- •Track cost basis accurately
- •Consider state capital gains taxes
- •Wash sale rule does not apply to gains
Risks to Consider:
- !State taxes may still apply
- !AGI increase can affect other benefits
- !Market timing risk if selling/rebuying
- !Transaction costs reduce benefit
- !Medicare premium increases possible
- !Must accurately project annual income
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