tax liability question

**shu_wd** Tue Mar 01, 2005 1:11 pm

tax liability question
hi, Blast,

Many BIRTP picks have been up a lot. If we were to take profit sometime this year, it could incurr a huge capital gain. My question is, it seems that my broker does not withold tax when I sell stocks. Therefore, won't I get penalty (e.g. if I owe IRS > $1000 in tax) for underpayment of tax on capital gain next year? Should I take some steps to make any compensation in tax everytime I take profit? Is it the so called "estimated tax"? How frequent should we do this?

In other word, how do you handle this problem? Or it is should not be a problem?

Thanks,

**blast_investor** Wed Mar 02, 2005 12:34 am

I am not tax expert. You can search over internet to get help on this.

Essentially, you need to file Schedule D and put all the sell transaction there. The broker should mail you 1099 tax forms or they have it in their web site for downloading or printing.

Turbotax software is not that expensive that might help you to file 1040 tax forms. I recommend Turbotax software if you want to save time and avoid hassles.

**blast_investor** Wed Mar 02, 2005 12:41 am

By the way, for capital gain tax, you only pay tax when you sell.

If you hold a stock for long term, you never sell, you do not pay tax.

BIRTP is tax efficient and its model portfolio trade is infrequent.

Check out this web on tax issues:
http://www.fool.com/

Also check out IRS home for publication and guidelines:

http://www.irs.ustreas.gov/plain/forms_pubs/index.html

Look for Capital Gain tax, and dividend tax rules.

**yongxin** Tue May 24, 2005 6:08 pm

penalty
As far as you paid more ($1) tax than last year, you will be fine.
owing IRS > $1000 in tax will not automatically trigger penalty.