to my knowledge there is no tax penalty on capital gains. You don't have to make quarterly estimates on that income. You just pay what you own when you file your taxes. I'm not a CPA, but this is what my CPA told me some years ago. Perhaps it's changed since that advice was given, so please don't take this as gospel.

If you have some losers in your portfolio, you might consider liquidating them as well to help offset some of the tax burden. The end of they year is a good time to re-balance. I too am moving away from equities as predicting what will happen to the market in the next 12 months is a crap shoot at best. I know long term the market is always going to rebound, but us old farts can't wait 10-15 years to recover a big loss. Even if you "sit on the side lines" for a year or so, there's nothing stopping you from getting back in when you feel things have settled down. You might lose a year's worth of growth, but you also might save a 20-30% decline. Again, I'm not a CPA or investment professional so take it for what it's worth.

quote:

Originally posted by Sig209:
The long-term capital gains tax rate is either zero percent, 15 percent, or 20 percent as of 2019, depending on your income.

This aspect is easy to overlook. When thinking of taking a large amount of capital gains, make sure your accountant has an estimate of this year's and next year's income in hand to help guide his/her advice.

I found out (by accident!) that the income from the capital-gain itself is not included in the income calculation that determines which tax rate applies.

Get professional advice.

RE: the decision to diversify part of your portfolio out of a few high-risk investments that have done well to date. Can't argue with that.

The original post gave the impression that you were liquidating everything - which is timing the market by another name, and arguably not a good idea at any time.

Estimated tax requirements to avoid penalties are:

90 percent of the current year tax, OR

100 percent of the prior year tax (under 150K AGI), OR

110 percent of the prior year tax (over 150K AGI)

Those are the minimum amounts that must be paid. You certainly could owe more on top of that if you just pay the minimum.

I am a CPA and recommend that you consult one to prepare an estimate for 2019 and 2020 BEFORE you take action to sell holdings. Lots of variables in the computations - few included above - so competent advice requires detailed information and planning. It will be money well spent. In the process you may want to spread the sales across multiple years to avoid having a lot of income and tax in a single year. My 2 cents.

I'd call Vanguard and have them to a trustee to trustee transfer so you don't cash out and pay taxes. They will answer your calls and give excellent service.
They can set up some in an IRA or other tax deferred accounts but you didn't say how much money you're talking about. If it's more than 10 or 20 grand you need to get with a good CPA somehow and get real advise, not a bunch of opinions.

I don't want to start a shit storm but I see a correction coming and want to minimize the hit. If there is even a hint of a democrat being president or them taking the majority in the senate there will be a correction. Several other things that I see on the horizon worry me as well.

^^^^^^^^^^^^^
I get it. Old saying for Wall street. Bulls make money, Bears make money, but Pigs never do. Trees do not grow to the sky. Have to sleep at night. Wall of worry and hill of greed. Wall street has a kindergarten on one end and a graveyard on the other. Balance your emotions. That is how Warren Buffet has made his money. Keep us posted.