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DanielleCPA
DanielleCPA, Certified Public Accountant (CPA)
Category: Finance
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Experience:  CPA experienced in tax and financial planning
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Hello, I inherited 2 mutual funds in early 2008. I watch

Resolved Question:

Hello,

I inherited 2 mutual funds in early 2008. I watch these funds every month and they have been going up and down $300 about every month. They tend to peak in June/July or December/January, historically.

I need to sell both of them this year to pay for other expenses. I am not making that much money this year, so it will probably be best to sell them because I will still be in a low tax bracket, correct?

Also, they have gone up substantially in the past monht. Like +$1000. I am wondering if I should wait until December, and see if they go up more, or if I should sell them now.
Submitted: 2 years ago.
Category: Finance
Expert:  DanielleCPA replied 2 years ago.

DMC :

Hi and welcome to Just Answer! I'm happy to help answer your Finance questions. Feel free to interject at any time if you need clarification.

DMC :

If you are going to be in a low tax bracket and you need to sell these mutual funds, it would be favorable to do so.

DMC :

If you are in the 15% or lower tax bracket, your capital gains will be taxed at 0%. If you are in the 25% or higher tax bracket, they will be taxed at 15%.

DMC :

Your basis in the mutual funds would be the fair market value at the date of death, so any gain would be calculated as the selling price less FMV at date of death.

DMC :

It is up to you to decide when you would like to sell them - now or December. Just consider your financial needs.

DMC :

If you have any follow-up questions, please let me know and I will gladly answer them. If not, please hit the green accept button to indicate I answered your question.

DMC :

Thanks!

Customer:

Here is an excel document of the history of the fund.I realize any information you give me would just be an opinion, but what would you do? Sell it now or December?

Customer:

Full Size Image

Customer:

Also, can I roll the entire fund or part of the fund into a bank CD so I don't have to pay income taxes on it.

DMC :

My advice would be if you need the money now, then sell now. Without knowing any other information about the mutual fund, it does look the value will increase by December, so if you can hold out until then, then do it.

DMC :

It doesn't matter what you do with the money after you sell the mutual funds. It is taxable either way. So placing part of it into a CD isn't going to save you anything.

Customer:

I mean, for instance, my wife had some stocks and she rolled them over into an IRA, so we didn't have to pay income taxes on it - last year. I can't do something like that with mutual funds?

DMC :

Provided that you have earned income, you could place up to $10,000 into an IRA (5,000 for your wife, 5,000 for you). If you are each age 50 and older you could place an additional $1,000 a piece into an IRA for a total of $12,000.

DanielleCPA, Certified Public Accountant (CPA)
Category: Finance
Satisfied Customers: 662
Experience: CPA experienced in tax and financial planning
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