Stock Reinvestment Question/Tax Question

[Andrew Pettit]

Afternoon BP,

        I was just wondering when I sell a stock if I immediately reinvest it would that spare me of paying any capital gains? 

Thanks, Andrew 

[Michael Plaks]

@Andrew Pettit

The only relatively simple way (I know of) to avoid paying capital gain taxes on sold stock is to reinvest the capital gains into a Qualified Opportunity Zone fund. It's not really avoiding capital gain taxes but deferring them for approximately 6 years and discounting them by 10%. 

There're other significant tax benefits of investing in these funds, but the risks and restrictions are very significant, and you need to compare it against the more traditional investments. Especially now, in the new economic climate.

There're also some other, very complex and expensive ways to deal with capital gain taxes involving special trusts. I would not recommend looking into them unless your capital gains are very large, warranting the hassle and cost of those advanced solutions.