Suppose I purchase 110 shares of StockA in two transactions:
- Jan 2017 – 100 shares at $50 a share ($5000 total)
- Jan 2022 – 10 shares at $500 a share ($5000 total)
I bought these for long term investment and intend to hold on to them for many years and expect the stock will hit $1000 a share at some point before I sell them.
In April 2022, the stock dropped to $250 a share and has stayed there.
I want to cash out a little and sell 5 shares to cover some household expenses. What formula can I use to determine if it's better for me to:
- Sell 5 shares of the 2017 stake and pay long term capital gains on the profit
- Sell 5 shares of the 2022 stake, which would normally be subject to short term capital gains, but in this case I would instead be writing off a loss.
?
To simplify matters, lets assume the write-off does not change my income tax bracket.
Thanks!
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