How do I use the Capital Gains Estimator?

The first time you open the Capital Gains Estimator, it displays the Welcome window. After you've used it once, it will open the proposed sales scenario from your previous session.

After you set up a scenario, it remains until you explicitly change or delete proposed sales.

In the Tax Rates window, choose the short-term and long-term federal tax rates you want the Capital Gains Estimator to use for its calculations. You can also choose short-term and long-term state tax rates.

For rates that most closely reflect your true tax situation, including changes that may occur over the course of the tax year, use data and rates from the Tax Planner.

The tax rates shown in parentheses throughout the Capital Gains Estimator refer to the tax rate that would be imposed on the next dollar of income, or marginal tax rate. If you use data and rates from the Tax Planner, the Estimator window will first display the Tax Planner's estimate of your marginal rate. As you explore proposed sales, the federal rates shown may change. This tells you that the proposed sales have pushed you into that new tax bracket. Remember that the information in the Capital Gains Estimator is an estimate and not intended to be exact.

In the Capital Loss Carryovers window, enter investment losses that you couldn't deduct in prior years, which you want to use now to reduce your capital gains.

You can use Tax Planner values for your loss carryover (the default) or click Enter different values and enter the amounts of short-term and long-term loss that you want to carry over.

Remember that you can deduct only up to $3000.00 of any losses from previous years to offset your current-year gain. In addition, losses from selling short-term holdings will first offset current short-term gain, losses from selling long-term holdings will first offset current long-term gain, and so on, and the entire gain of a particular type must be offset before any remaining loss is applied to another type of gain.

For example, say you have $2500.00 in short-term losses from a previous year to apply to current gains. You want to apply these losses to $2000.00 in short-term gains and $1000.00 in long-term gains. You must offset the $2000.00 of short-term gains with your short-term losses first, leaving $500.00 remaining to offset half the amount of your $1000.00 in long-term gains and resulting in a $500.00 long-term gain remainder.

At the top of the Estimator window, under Step 1, click to place a check mark in the left-side column next to a lot that you're thinking of selling. Repeat for all the lots that you want to include in your scenario. Any securities that have missing cost basis information will not appear in this window.

In the table under Step 1, Gain/Loss estimates the gain or loss per security lot and per security based on the sale of all shares at the listed price. The security price shown here is the price, as of your most recent update. When you move on to Step 2, you can identify specific shares and adjust the per-share sale price.

When you enter Buy or Sell transactions, Quicken can keep track of lots for you. This gives you the most detailed capital gains information at tax time. Do not use average cost per share without first considering the tax implications.

Mixed in a holding period column indicates a mutual fund with average cost tracking.

In the Estimator window, under Step 2, specify the number of shares you'd like to sell from each lot, and the sale price you anticipate for each security. You can adjust the sale price to see what difference a rising or falling security price would have on your sale.

To remove lots from your proposed scenario, double-click the security name under Step 2.

In the table under Step 3, Quicken displays any gain and loss from transactions, grouped by whether the gain or loss is short-term or long-term. In addition, if you're selling shares from an Employee Stock Purchase Program (ESPP) or ESOG (Employee Stock Option Grant) shares, the amount of ordinary income you'll realize is included. (All option sales are considered same-day sales for the purpose of the Capital Gains Estimator. See the Notes section at the bottom of the topic for additional information regarding ESOG and ESPP sales.)

Below the table, the Estimator window shows the gross proceeds of your sales, an estimate of the taxes you might have to pay on this total, and the net proceeds from your proposed sales, based on the tax rates you've selected. If you selected Tax Planner rates, the Estimated Federal Tax Impact will be based upon the marginal rate shown in the Planner. State Tax is based on the state tax rates you entered in the Tax Rates window, and does not include ESPP or ESOG income. If you see a negative amount, this is an estimate of the possible reduction in your tax because of a capital loss from this sale. Note that Capital Gains rules limit the amount of losses you can take, so this amount may overstate your tax benefit when all of your sales are netted and the limitation rules applied.

Hidden securities aren't included (unless you clicked Options in the Security List and selected View Hidden Securities). Securities in tax-deferred accounts such as 401(k) accounts and IRAs are not included, but tax-free securities such as tax-free municipal bonds are.

You can't use the Capital Gains Estimator to propose short sales.

• Click Capital Gains Tax Before Proposed Sale to view your year-to-date capital gains or losses and estimated year-to-date federal taxes on any gains without taking into account the sale you're proposing.
• Click Capital Gains Tax After Proposed Sales to view your year-to-date capital gains or losses, plus the gains and losses from your proposed sales, and estimated year-to-date federal taxes on any gains.