Tax-loss harvesting still works
Realize losses in taxable accounts to offset realized gains dollar-for-dollar. Excess losses up to $3K/yr offset ordinary income; the rest carries forward indefinitely. The wash sale rule (30 days) is the main trap.
Why holding 1 year and 1 day matters
Short-term gains tax at ordinary rates (10–37%). Long-term at 0/15/20%. On a $50K gain, the difference between 35% ST and 15% LT is $10,000. Set calendar reminders for cost-basis lots.
QSBS exclusion (Section 1202)
Founders of C-corps held >5 years can exclude up to $10M or 10× basis in capital gains — federal tax = $0. State varies (CA, PA don't recognize). One of the most valuable tax provisions for startup employees.
FAQ
Does NIIT apply to all gains?
Yes — both ST and LT capital gains count as 'net investment income' when AGI exceeds $200K (single) or $250K (MFJ). The 3.8% is on top of regular tax.
Can I avoid state cap gains tax by moving?
Only if you establish full residency before the gain is realized. Stock options/RSUs vested in CA generally remain CA-taxable even after a move. Sale of a privately held company has more flexibility — talk to a CPA.
What about crypto?
Crypto is treated as property — same LT/ST distinction applies. Every swap (BTC → ETH) is a taxable event. Track basis lot-by-lot or pay the wash-sale-rule penalty (note: wash sale doesn't currently apply to crypto, an open loophole).
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