<topic sku="dlxbiz" tNum="288922" author="" xmlns="x-schema:hhTopicSchema.xml"><index><title>Estimate capital gains and taxes</title><category>lifeplan</category><klink type="prcdr">How do I estimate capital gains and taxes?</klink></index>
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<tease>Why?</tease>
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<p>The Capital Gains Estimator can help you plan your investment sales and see how they would affect your tax situation. You can see your gain or loss from potential sales, estimate your capital gains tax and after-tax net proceeds, and experiment with offsetting <glossary tNum="286960">capital gains</glossary> with capital losses.</p>
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<p>For even more powerful capital gains estimation tools, import your Microsoft Money investment information file to GainsKeeper. GainsKeeper makes it simple for you to use your Money file to complete your IRS Schedule D, and offers precise capital gains calculations that automatically adjust for wash sales, stock splits, and mergers and spin-offs. Plus, you'll have access to tools and suggestions that could help save money on your taxes. All Microsoft Money users receive a free 30-day trial for GainsKeeper and discounts on an annual subscription. Money Premium and Money Small Business users get a whole year free!</p>
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<tease>Learn more about GainsKeeper</tease>
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<ol>
<li>On the <emph>Investing</emph> menu, click <emph>Portfolio</emph>.</li>
<li>In the left pane on the <emph>Other Tasks</emph> list, click <emph>Capital gains tracking for Schedule D</emph>.</li>
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<ol>
<li>On the <emph>Taxes</emph> menu, click <emph>Capital Gains Estimator</emph>.</li>
<li>Click <emph>Get Started</emph>.</li>
<li>Enter the following information:</li>
<ul>
<li><emph>Select your filing status.</emph> Your filing status affects your income tax brackets. If you will file as a Qualifying Widow(er) with Dependent Child, select the <emph>Married Filing Jointly</emph> filing status.</li>
<li><emph>Select your income bracket for this tax year.</emph> Money uses this to determine your short-term and long-term capital gains tax rates.</li>
<li><emph>Do you want to estimate your state income tax on capital gains?</emph> Select <emph>No, don't estimate state income tax on capital gains</emph> if your state does not tax capital gains or you don't want to consider state income tax in your capital gains tax projections. Otherwise, select <emph>Yes, estimate state income tax on capital gains using these rates</emph> and enter the rates at which your state taxes short-term and long-term capital gains. If your state does not have special capital gains tax rates, enter the rate at which your ordinary income is taxed by your state.</li>
<li>In the <emph>Short-term loss</emph> or <emph>Long-term loss</emph> boxes, enter your capital loss carryovers .</li>
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<li>Click <emph>Next</emph>.</li>
<li>Select the accounts that contain investments you may want to sell, and then click <emph>Next</emph>.</li>
<li>On the <emph>Estimate capital gains and taxes</emph> page, enter the following information about your proposed investment sale:</li>
<ul>
<li><emph>Date of sale.</emph> Enter today's date or the future date when you expect to sell the investment. For example, if you have owned an investment for almost one year, you can enter a date at which you will have owned it for more than a year and see how qualifying for the long-term capital gains tax rate affects your tax.</li>
<li><emph>Distribution method.</emph> If you sell less than all the shares you own of an investment that you purchased at different times, you can choose a distribution method to determine which lots you sell shares from. Unless you specify otherwise, the shares from the first lot you purchased will be the first shares assumed sold. </li>
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<li><emph>FIFO.</emph> Select <emph>First-In, First-Out (FIFO)</emph> if you want to sell the first shares you purchased. If your investment has been steadily gaining in price, this method will generally give you the largest taxable gain because you will be selling the stocks you purchased for a lower price.</li>
<li><emph>LIFO.</emph> Select <emph>Last-In, First-Out (LIFO)</emph> if you want to sell the last shares you purchased. </li>
<li><emph>Max gain.</emph> Select <emph>Max gain</emph> if you want Money to sell the shares with the lowest basis, resulting in the maximum gain this year. You may want to consider this strategy if you are in a lower tax bracket this year than usual, or if you have capital losses to offset your gains.</li>
<li><emph>Min gain.</emph> Select <emph>Min gain</emph> if you want Money to sell the shares with the highest basis, resulting in the minimum gain this year.</li>
<li><emph>Custom.</emph> Select <emph>Custom</emph> if you want to specify which shares from each lot to sell.</li>
<p>Unless you use FIFO, you must tell your broker in writing which shares you want to sell before you make the sale.</p>
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<li>In the <emph>Qty to Sell</emph> column, enter the total number of shares you want to sell for each investment. The shares will be distributed by lot according to the <emph>Distribution method</emph> you have selected. If you selected <emph>Custom</emph>, enter the number of shares you want to sell from each lot.</li>
<li>In the <emph>Sale Price</emph> column, enter the price at which you expect to sell each investment. If you are connected to the Internet, you can click <emph>Update prices</emph> in the left pane to use the current price.</li>
<p>Under <emph>Results of proposed sales</emph>, you can see the total amount you would receive from the sale, any carryovers, your net gain or loss, estimated federal and state capital gains tax, and your after-tax net proceeds.</p>
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<li>Click <emph>Next</emph>.</li>
<li>The <emph>Estimated Capital Gains Tax Summary</emph> shows the results of your proposed investment sales, your capital gains and estimated capital gains taxes on investment sales so far this year in your Money file, and the results of your proposed and year-to-date investment sales combined. </li>
<li>To print the summary, click <emph>Print</emph> at the bottom of the page.</li>
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<tease>Why don't I see all of my investments listed?</tease>
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<p>The Capital Gains Estimator excludes investments that are in retirement accounts because gains in retirement accounts are not taxable and losses are not deductible.</p>
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<tease>What's the difference between the Capital Gains Estimator and GainsKeeper?</tease>
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<p>The Capital Gains Estimator is a tool in Money that helps you understand the tax consequences of potential or actual investment sales. GainsKeeper, a Microsoft partner, is a Web service that provides subscribers with detailed capital gains tracking, automated completion of IRS Schedule D, and tools and suggestions for managing capital gains and losses. You can use your Money investment information in GainsKeeper. </p>
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<tease>Learn more about GainsKeeper</tease>
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<ol>
<li>On the <emph>Investing</emph> menu, click <emph>Portfolio</emph>.</li>
<li>In the left pane under <emph>Common Tasks</emph>, click <emph>Capital Gains Tracking for Schedule D</emph>.</li>
