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Your broker should send you all the forms you need with numbered boxes to make it easy. Who's your broker?
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Nov 9, 2015 15:06
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Saint Fu posted:Your broker should send you all the forms you need with numbered boxes to make it easy. Who's your broker? I have a Vanguard account, no broker, so I guess it comes out with the other 1099-INTs and other stock forms? Wait - the PRU I have, it was gifted to me and I've held it less than a year. Should I hold off on selling it to get the long-term capital gains rate? It's a big chunk of taxable change, and since it's gifted, isn't it all technically a capital gain? MJP fucked around with this message at 15:41 on Nov 9, 2015 |
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Nov 9, 2015 15:36
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Totally wrong
Happiness Commando fucked around with this message at 01:12 on Nov 10, 2015 |
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Nov 9, 2015 16:16
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MJP posted:I have a Vanguard account, no broker, so I guess it comes out with the other 1099-INTs and other stock forms?
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Nov 9, 2015 16:27
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Happiness Commando posted:Your cost basis is set at what it was when given as a gift. So if you got it at $100/share and now its $200/share, you only pay cap gains tax on $100/share. If it has appreciated noticeably, I would hold it until it would be taxed at long term gains OK cool. I got it 5/8/2015, so it's a loss, hooray!
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Nov 9, 2015 16:43
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Happiness Commando posted:Your cost basis is set at what it was when given as a gift. So if you got it at $100/share and now its $200/share, you only pay cap gains tax on $100/share. If it has appreciated noticeably, I would hold it until it would be taxed at long term gains Isn't this only if you first paid income taxes based on the value it was when the gift was received? That's how it works when my job gives me stock as compensation: I pay regular income tax based on the value when I get the stock or it vests, then that's my cost basis (since I paid the tax at that level) then when I sell it any change in the price is capital gains/loss. You might actually want to get a real accountant for this instead of having needs from the something awful forums dot com advise you here.
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Nov 9, 2015 17:04
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Happiness Commando posted:Your cost basis is set at what it was when given as a gift. So if you got it at $100/share and now its $200/share, you only pay cap gains tax on $100/share. If it has appreciated noticeably, I would hold it until it would be taxed at long term gains This is false. If it's gifted to you, you inherit cost basis and holding duration. Think about it this way - I buy stock at $1. I gift you it, tax-free at $1k per share. You think the taxman isn't going to take a piece of the stocks appreciation? For the purposes of the gift tax, if any, it's based on the value if sold today. But not for when the recipient goes to sell. Essentially, you wind up shifting the capital gains tax burden to the receiver. E: this is also why if you can do charitable giving via stock gifts instead of cash, that is preferred - no tax on the sale, but you get the full deduction. Zauper fucked around with this message at 17:47 on Nov 9, 2015 |
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Nov 9, 2015 17:40
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Hmm. $10k of stock would be one hell of a tax deduction. At this point I definitely do gotta involve an accountant... I do my taxes through the goon tax guy, so I'll start with him.
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Nov 9, 2015 18:14
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I'm in the process of transferring my Roth from USAA to Vanguard, and I'm trying to decipher some of the required paperwork. Does anyone know if I need a Medallion signature guarantee on my paperwork? The owner / registration type of the account isn't changing. I don't have a local bank branch, so hopefully the answer is no. il serpente cosmico fucked around with this message at 02:11 on Nov 10, 2015 |
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Nov 10, 2015 00:23
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Call Vanguard and ask. They're super helpful.
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Nov 10, 2015 00:31
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Zauper posted:This is false. Thanks for the correction 
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Nov 10, 2015 01:13
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Guy Axlerod posted:Call Vanguard and ask. They're super helpful. I talked to Vanguard and they said that they don't require one, and it's up to USAA. Dude went on to say that they had "conflicting information" as to whether USAA would require one or not. I talked to USAA, and they said it was up to Vanguard, but the agent didn't sound 100% sure. She said, "I know we don't require one when an account is being transferred TO us" as proof that it should work the same way when money is being taken from them. Sounds dicey. I do have a lot of products through USAA and have had a relationship with them for a solid 15 years now, so hopefully that'll work in my favor. So w/e, I'm just going to send it in without the medallion guarantee and see what happens. What's annoying is that I have a Chase credit card and I was previously able to obtain a guarantee through them, but they apparently changed their policy and now they won't give me one. I suppose it still pays to have access to a brink and mortar bank from time to time. If USAA refuses the transfer, I'll look into moving all my banking to a local CU that can provide the service. il serpente cosmico fucked around with this message at 02:11 on Nov 10, 2015 |
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Nov 10, 2015 02:09
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Purposefully posting this in long-term investing thread so that you guys will side with me on being less volatile... Job offer equity vs. options: $110k equity or $330k options or any combination of those two (1 equity = 3 options) If I'm doing the math right: Prices goes up 0% Options are worth $0 to me (I don't exercise, don't profit) Equity: $110k If the price goes up 50%... Options: $330k * 0.5 = 165k Equity: $110 * 1.5 = $165k By taking any amount of options, I'm basically gambling that the stock price will increase by more than 50%, as a rolling average, over 4 years for options to be worth it, correct? Not to mention that I'll likely have to sell some equity for short-term gains tax or use my own income to buy the options, and either risk more volatility having them in the market for long-term gains, or take short-term gains once again and immediately sell them off. I've received the advice "maybe take some options because you're young and can weather the volatility" but being a math/expected value guy, going with options sounds like a losing play on average. Any advice/comments? Am I even doing this math right? Blinky2099 fucked around with this message at 02:27 on Nov 10, 2015 |
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Nov 10, 2015 02:17
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Blinky2099 posted:Job offer equity vs. options: The options are being offered to you at a certain strike price by a certain execution date, and you have the right to purchase shares at that amount prior to the date. The value of the option depends upon the price and the date. Essentially you are taking the long side of a call contract while the employer holds the short. I'm not an expert on options pricing but my understanding is that for various accounting and tax reasons the stated value of employee options is generally less than the value of comparable options on the open market. I guess it depends a lot upon the pricing model they are using to decide what the fair value of the options is but taking options broadly speaking sounds like the better deal if they are offered at a 3:1 ratio and you are young and risk tolerant. The tax implications of ESO are complicated and to get maximum money out of them with minimum taxation you will be exposed to a lot of risk in your company for a fairly long time (which is really the point). You might ask around to see if anyone in your company knows a fee only financial advisor who can help you run the numbers. BEHOLD: MY CAPE fucked around with this message at 02:40 on Nov 10, 2015 |
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Nov 10, 2015 02:33
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E: I'm too newb to comment. I'll have to google/RTFM.
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Nov 10, 2015 02:36
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BEHOLD: MY CAPE posted:The options are being offered to you at a certain strike price by a certain execution date, and you have the right to purchase shares at that amount prior to the date. The value of the option depends upon the price and the date. Essentially you are taking the long side of a call contract while the employer holds the short. I'm not an expert on options pricing but my understanding is that for various accounting and tax reasons the stated value of employee options is generally less than the value of comparable options on the open market. And that's where I did the math above. But I could be very wrong about this, it's my first time dealing with them. edit:good idea contacting a financial advisor. it could be a major impact so I might as well sit down with one for 30 minutes. thanks for the post! Blinky2099 fucked around with this message at 02:57 on Nov 10, 2015 |
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Nov 10, 2015 02:46
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Blinky2099 posted:I was under the impression that both have a strike price. With equity there will be a strike price of $110k/4 years = that amount of shares is what I'll receive each year, regardless of whether price goes up or down. Options are the same strike price but have to go up to make money. Only options have a strike price. If it's just straight up RSU/RSA shares, then you get that number of shares. Basically, it sounds like they're offering you something like: 1000 shares @ $10 ~~or~~ 3000 options w/ a $10 strike. On the day they're issued, trading at $10, the first option would be worth $10,000. The options would be worth $0. However, for every $1 the price rises above $10, the equity increases in values by $1000, but the options increase by $3000. In a year if the price is at... $15, the equity is worth $15,000, the options are worth $15,000. $20, equity is worth $20,000, the options $30,000. $25, equity is worth $25,000, the options $45,000. $11, equity is worth $11,000, options $3,000 $6, equity is worth $6000, options $0 $3, equity is worth $3000, options $0 So the straight equity option is "safer" but less reward if the company stock price does well. The options are riskier but have a much larger potential upside. This is why people often refer to options as "leverage" even though you aren't, strictly speaking, borrowing money.
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Nov 10, 2015 05:46
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mrmcd posted:$15, the equity is worth $15,000, the options are worth $15,000. That seems like a terrible bet to make considering I'm not working at a microcap start-up or anything. If I was even remotely confident that the stock price would go up somewhere near 50%+ to make that bet, I better be pumping a shitload of my own income into the stock too...
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Nov 10, 2015 06:01
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mrmcd posted:Only options have a strike price. If it's just straight up RSU/RSA shares, then you get that number of shares. No, this is wrong in a really important way. The value of immediate exercise of an option is NOT equal to the intrinsic value of the option. ESOs are typically many years in length and the time value of the option is very significant even if the option is currently at strike price or even out of the money. It is completely incorrect to say that a ten year option granted at market price is worth $0 the day it is issued. It can be exercised for $0, but it's obvious you'd be completely nuts to do so. http://www.investopedia.com/university/employee-stock-options-eso/eso3.asp
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Nov 10, 2015 06:44
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BEHOLD: MY CAPE posted:No, this is wrong in a really important way. The value of immediate exercise of an option is NOT equal to the intrinsic value of the option. ESOs are typically many years in length and the time value of the option is very significant even if the option is currently at strike price or even out of the money. It is completely incorrect to say that a ten year option granted at market price is worth $0 the day it is issued. It can be exercised for $0, but it's obvious you'd be completely nuts to do so. Whoops. Completely overlooked the fact that we can't assign a $0 value to them since we aren't forced into exercising/not exercising as soon as they vest. It's actually a very volatile stock, so that might make options potentially worth more than a low volatility stock... sounds like I should talk to an adviser.
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Nov 10, 2015 07:34
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Blinky2099 posted:Whoops. Completely overlooked the fact that we can't assign a $0 value to them since we aren't forced into exercising/not exercising as soon as they vest. Aren't stock grants taxed as income when you receive the grant, while options can be held and taxed as long term cap gains?. My understanding is that options are only taxed on exercise if they are discounted by the company, which it sounds like yours are not. That also changes the balance some.
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Nov 10, 2015 12:05
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BEHOLD: MY CAPE posted:No, this is wrong in a really important way. The value of immediate exercise of an option is NOT equal to the intrinsic value of the option. ESOs are typically many years in length and the time value of the option is very significant even if the option is currently at strike price or even out of the money. It is completely incorrect to say that a ten year option granted at market price is worth $0 the day it is issued. It can be exercised for $0, but it's obvious you'd be completely nuts to do so. Well, OK, in a strict economic sense it has extrinsic value, yes, which is why options on options exchanges with OTM strikes still trade above zero. I have yet to see any ESOs that were transferrable though, so the only gains you can actually realize are from exercising. The extrinsic value is only relevant in this case if you want to crank out a Black-Scholes to calculate your theoretical net worth.
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Nov 10, 2015 13:11
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mrmcd posted:Well, OK, in a strict economic sense it has extrinsic value, yes, which is why options on options exchanges with OTM strikes still trade above zero. Well, the practical implication is that if the company says "you can have $330k of stock options or $110k in stock grants" like OP, what exactly constitutes $330k of options is determined by some Black-Scholes model, and further such an estimation of value would be very important to an option holder going forward to decide when to exercise them.
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Nov 10, 2015 13:38
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What should you contribute to if you exceed the salary limit for a Roth IRA? Why the gently caress is there such a low salary cap on Roth IRAs, anyways? Apparently if you make more than $116,000 you are excluded from using a Roth IRA... unless there's a loophole or something? I contribute to a 401k but my employer doesn't do any matching, so I was considering starting a Roth IRA but it sounds like I'm not allowed to? Is there a better investment vehicle available to me?
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Nov 10, 2015 17:49
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Look up back-door Roth IRA.
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Nov 10, 2015 17:56
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ashgromnies posted:Apparently if you make more than $116,000 you are excluded from using a Roth IRA... unless there's a loophole or something? Keep in mind that the Roth IRA contribution limit is your AGI, not your gross income. If you max out your 401k that knocks your AGI down $18k. If you have an HSA and max it out that's another $3300. You say that you contribute to your 401k, but are kind of implying that you would contribute to a Roth IRA instead of your 401k? Unless your 401k options are godawful terrible, you should likely be maxing out your 401k at your income level. Otherwise, yep, back-door. If you don't have much/any traditional IRA holdings, that is. Guinness fucked around with this message at 19:05 on Nov 10, 2015 |
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Nov 10, 2015 19:01
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Hey Bogelhead goons! I'm sitting on a bit of cash I'd like to invest into a taxable account. Currently, my only holdings are less than 10k in a Roth IRA LifeStrategy Growth Fund Investor Shares (VASGX), (which has only kinda lost money since I purchased it). Assuming some of you have purchased Vanguard Total Stock Market Index Fund Admiral Shares(VTSAX), did you wait for a specific time to invest in the fund and if so, how did you personally time it? The poster on this forum's thread http://forum.mrmoneymustache.com/investor-alley/moving-$80k-cash-to-vanguard-taxable-account-funds-timing/ (Frankies Girl) replies to an investor asking a similar question "It is a good time (especially now with the market being "on sale" due to the pull-back/correction) to get your money invested." But this article was written in 2014 so I was just wondering if you guys could provide insight on what this poster meant and whether you think now is or is not a good time. Thanks and sorry for any ignorance on my part, investing is something I'm less versed in than other things.
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Nov 10, 2015 20:08
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sean price posted:Hey Bogelhead goons! I'm sitting on a bit of cash I'd like to invest into a taxable account. Currently, my only holdings are less than 10k in a Roth IRA LifeStrategy Growth Fund Investor Shares (VASGX), (which has only kinda lost money since I purchased it). The answer to this question in general is always "as soon as possible." Don't try to time the market.
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Nov 10, 2015 20:11
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sean price posted:Hey Bogelhead goons! I'm sitting on a bit of cash I'd like to invest into a taxable account. Currently, my only holdings are less than 10k in a Roth IRA LifeStrategy Growth Fund Investor Shares (VASGX), (which has only kinda lost money since I purchased it). In general, the common wisdom is that "you can't time the market" - if you're investing over the long term, then your tolerance should exceed month-to-month swings. Some prefer to drip in investments on a monthly basis to average out the swings throughout the year. If you think that now is as low as the market will get before returning upward, now would be a good time to invest, yes. But if you think that the market has further down to swing, then you should wait until then. Because none of us know the answer to that question, your best bet is to not try to outsmart it.
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Nov 10, 2015 20:13
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Especially because the market invariably does go up and will always do so over a long enough timeline, time in the market beats timing the market. You may get lucky and pick the right time to buy or not buy once or twice, but eventually you'll get burned versus just putting your money into a diversified portfolio and keeping those assets balanced.
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Nov 10, 2015 20:46
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ashgromnies posted:What should you contribute to if you exceed the salary limit for a Roth IRA?
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Nov 10, 2015 21:51
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http://awealthofcommonsense.com/worlds-worst-market-timer/ Invest whenever you feel like, it doesn't make a difference in the long run as long as you're diligent about it, don't panic during a downturn, and you diversify appropriately. The biggest key is to save consistently. If your investment in an S&P500 fund goes to poo poo and stays there, it's probably a good sign that there are bigger things to worry about. Not a Children fucked around with this message at 22:08 on Nov 10, 2015 |
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Nov 10, 2015 22:05
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flowinprose posted:The answer to this question in general is always "as soon as possible." Yeah it's impossible to know the future performance of the market. Things like having a good strategy using the lowest yearly cost quality investments and also saving consistently are much more important in the long run.
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Nov 11, 2015 03:30
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Thank you guys. Also, any thoughts on the comment of user "jestjack" on this article http://www.budgetsaresexy.com/2014/06/lazy-one-fund-investing-strategy/ who advocates TIAA-CREF over Vanguard?
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Nov 11, 2015 03:56
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sean price posted:Thank you guys. That poster is full of poo poo. Their main argument seems to be "Vanguard is too good to be true; they can't hire the brilliant minds needed to get good returns with such low fees. Also, energy and almonds are important." But, the whole point of the index strategy is that, in the long run, financial geniuses trying to beat the market don't do any better than the market itself. Just matching the market gets similar results, it's cheaper and easier, and it doesn't require financial geniuses at all.
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Nov 11, 2015 04:35
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Space Gopher posted:That poster is full of poo poo. a fool and his money are soon parted  Not to mention investing in commodities is pretty challenging and tends to use more complex esoteric methods the investments such as ETNS. etalian fucked around with this message at 05:05 on Nov 11, 2015 |
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Nov 11, 2015 05:02
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lmao at that dude being impressed by a financial institution's almond holdings
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Nov 11, 2015 05:23
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etalian posted:a fool and his money are soon parted Take a Vanguard fund of your choice, take the total fund capital in billions and multiply that by the tiny management fee, then realize for the huge majority of funds it's just a couple of guys following some very automatic indexing strategy outlined in the prospectus, and you can solve the mystery for yourself
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Nov 11, 2015 05:58
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BEHOLD: MY CAPE posted:Take a Vanguard fund of your choice, take the total fund capital in billions and multiply that by the tiny management fee, then realize for the huge majority of funds it's just a couple of guys following some very automatic indexing strategy outlined in the prospectus, and you can solve the mystery for yourself It's also important to note in addition to high expense ratios the other big cost of active management is all the stock trading and commissions is another simple factor that drags down returns over time. Meanwhile a passive index fund will have minimal turnover and hence lower trading costs by comparison due to the much simpler investment strategy.
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Nov 11, 2015 07:08
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Won't the domestic almond market collapse once California runs out of water, anyway?
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Nov 11, 2015 16:07
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