The Mind Money Spectrum Podcast

#68. Don't get burned by what you don't know about cost basis.

March 30, 2021 Aaron Agte and Trishul Patel Season 2 Episode 16
The Mind Money Spectrum Podcast
#68. Don't get burned by what you don't know about cost basis.
Chapters
The Mind Money Spectrum Podcast
#68. Don't get burned by what you don't know about cost basis.
Mar 30, 2021 Season 2 Episode 16
Aaron Agte and Trishul Patel

Tax-loss harvesting first requires a good understanding of cost basis.

In this episode, Trishul and Aaron discuss cost basis, which is typically the purchase price from which a taxable capital gain is calculated. But it's not that simple given all the extra adjustments you might need to make on your tax return. Commissions, fees, capital gain distributions, reinvested dividends, and stock splits are just some of the things that can impact your cost basis. By tracking your cost basis at the tax-lot level, you might even lower your taxes. FIFO and LIFO are often used as a default, but both may land you with a higher tax bill. Finally, there's tax-loss harvesting, which can be an effective strategy to save money over market cycles.

Episode References

Cost Basis: Tracking Your Tax Basis
Investopedia: Cost Basis
Investopedia: What Determines Your Cost Basis
Cost Basis for Real Estate
Investopedia: Bid-Ask Spread
Investopdeia: Tax-loss harvesting
Investopedia: Rebalancing

Podcast Description

Welcome to The Mind Money Spectrum Podcast where your hosts Aaron Agte and Trishul Patel go beyond traditional finance questions to help you explore how to use your money to achieve the freedom you want in life. Aaron is a Financial Planner from the Bay Area, and Trishul is a Wealth Manager on the East Coast. For more information about Aaron, check out GraystoneAdvisor.com. And for more information on Trishul check out InvestingForever.com. We thank you all for listening, and stay tuned for our latest episode on our website, MindMoneySpectrum.com.

Show Notes

Tax-loss harvesting first requires a good understanding of cost basis.

In this episode, Trishul and Aaron discuss cost basis, which is typically the purchase price from which a taxable capital gain is calculated. But it's not that simple given all the extra adjustments you might need to make on your tax return. Commissions, fees, capital gain distributions, reinvested dividends, and stock splits are just some of the things that can impact your cost basis. By tracking your cost basis at the tax-lot level, you might even lower your taxes. FIFO and LIFO are often used as a default, but both may land you with a higher tax bill. Finally, there's tax-loss harvesting, which can be an effective strategy to save money over market cycles.

Episode References

Cost Basis: Tracking Your Tax Basis
Investopedia: Cost Basis
Investopedia: What Determines Your Cost Basis
Cost Basis for Real Estate
Investopedia: Bid-Ask Spread
Investopdeia: Tax-loss harvesting
Investopedia: Rebalancing

Podcast Description

Welcome to The Mind Money Spectrum Podcast where your hosts Aaron Agte and Trishul Patel go beyond traditional finance questions to help you explore how to use your money to achieve the freedom you want in life. Aaron is a Financial Planner from the Bay Area, and Trishul is a Wealth Manager on the East Coast. For more information about Aaron, check out GraystoneAdvisor.com. And for more information on Trishul check out InvestingForever.com. We thank you all for listening, and stay tuned for our latest episode on our website, MindMoneySpectrum.com.