How to Model Sale of Stocks


Lets say I have 100 k in a checking account and 200 k invested in stocks. My broker told me that when I sell some stocks for cash I will have to pay about 7% tax.

How should I configure this scenario?

Thank you for time.


 John N.


Right now the program does not account for the basis of a stock investment in the Taxable bucket.  We may change the program to account for that, but for now... you can get a little closer doing some manual adjustments.

Here are a few ways to model this.

Option 1: Enter the net of tax value of the investments so that when the investments are dipped into, the 7% is already factored in.   So in this case don't enter $200k but instead enter $200k - 7%(200k) = $186,000.  In this way the taxation of the sitting balance is already accounted for.  The growth will be taxed at the rate on Other Assumptions.

Option 2: If you want to be really specific about the taxation, you could enter the tax owed as "Special Expense" and manually figure the tax.  But this would only be helpful if you either sell and distribute the entire amount in one year OR if it is something fairly easy like $40k a year over 5 years.  If you are letting the program dip into the investments "as needed" then this option would be a bit difficult.  But you could still look at the Spreadsheet to figure the amount taken from Taxable and then enter a 7% special expense for each year that you want to model this.

Option 3: Don't enter as an Investment but instead enter it as a Cash Infusion that gets injected in the future.  You can use "Tax Rate to Apply" column to enter the 7%.  If you do it this way, it's a bit similar to Option 1 but you would be able to see the total infusion amount given whatever investment return you set, and then it would deduct the taxes and inject it into the plan.



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