I have some stock certificates that I’d like to sell. How do I do this? A little googling seems to indicate I should find an online broker, open an account with them, mail the certs to them, then have them sell them.
Maybe this is better in IMHO, but is this really the best way? Any idea how much I can expect to pay in fees to sell them? The certificates aren’t really worth all that much, but I want to sell them before the end of the year due to the increase in capital gains taxes. I figure right after the first of the year I can buy back the shares and therefore any gains made from this point forward I’ll pay the 20% on, but the past gains I’ll pay only 15%.
Check with investor relations at the company in which you own shares and find out who their transfer agent is. It will someone like Mellon, Bank of New York, etc. Contact the transfer agent and tell them what you want to do. You may have to open an account, but that should just be a formality and free. You can then sell or transfer the shares. I believe this is done commission free, but you will have to check.
That is how things work when you invest in specific companies through a DRIP (dividend reinvestment program). I don’t know if you can come in off the street and do this, but the investor relations department should be able to point you in the right direction.
If you sell and buy back substantially the same shares within 60 days you’ll be subject to the IRS “wash sale” rules. Which are designed to prevent exactly the plan you’re hatching. Wait 61 days to repurchase and you’ll be fine (at least as I understand it).
Suggest you do a bit of reading at irs.gov to make sure you understand the exact rules.
If you’re going to use an online broker, a lot of them have offices in most areas. I’d be surprised if you couldn’t drop your certificates off in person rather than mailing them (that always makes me feel more comfortable).
The whole point of capital gains is that you can defer your tax payment and earn compounding returns off of it instead of having to cash out the taxes each year. Selling now and paying 15% taxes actually penalizes your future gains.
Obviously your holding period and expected returns can alter the analysis, but if you’ve got a long holding period, you’re probably as-good or better off just holding. And if the overall value of the certificates is small, it’s probably not worth trying to optimize the tax advantages. There’s probably better things you could be doing.
Of course, selling now gives you downside protection if you think capital gains rates will increase dramatically or will go away and be taxed as ordinary income.
If you’ve done that analysis, great, otherwise, I would encourage you to do it.
If you decide to sell, get started now! The end of year is a busy time for brokerage firms and all the holidays don’t help. The back office gets overwhelmed with all the end of year requests and of course they’re all 'URGENT!"
You’re assuming that the Bush tax cuts, which I believe include the current capital gains rates, are going to expire at the end of the year. Given the recent election results I think there is a good chance that they will be extended, at least for another year or two.
FasterThanMeerkats - You might be right about holding on to the stocks. I hadn’t considered the opportunity cost of paying the tax now. I should have considered that.
dolphinboy - I thought if the Republicans gained more control there might be an extension of the tax cuts, but since I hadn’t read anything saying that looked likely and since I don’t think they could get something like that through the house, I thought it would be better to pay the lower tax on the gains now. But between you and Faster I think I’ll just stick with holding onto them.
Besides that, with the places I’ve been checking around with they want a minimum of $200 to transfer the shares for me.