| name | tax-optimize |
| description | Calculate optimal trim strategy with tax math. Compares Sell-Now (STCG/LTCG depending on holding period) vs Wait-for-LTCG vs Hedge-with-Puts (no taxable event). Computes lot identification (FIFO/HIFO/Specific Lot), tax loss harvesting opportunities. Asks for shares + buy date + income bracket + state. Triggers in English ("should I sell X for tax", "tax on selling X", "LTCG vs STCG on X", "trim X tax efficient") or Chinese ("X 减仓税务", "X 卖出税多少", "现在卖还是等长期", "X 减仓最省税"). |
Tax Optimize — LTCG vs STCG Decision Framework
Goal
When user wants to trim a winner, don't just sell — calculate:
- LTCG vs STCG difference ($ saved by waiting)
- Specific lot identification (which shares to sell first)
- Hedge-with-put alternative (no taxable event, similar risk reduction)
- Tax-loss harvesting (offset gains with losses elsewhere)
US Tax Rates Quick Reference (2026)
Short-Term Capital Gains (held < 1 year)
Taxed as ordinary income. Federal rates depend on AGI:
| AGI (single) | AGI (MFJ) | Rate |
|---|
| < $11,925 | < $23,850 | 10% |
| $11,925-48,475 | $23,850-96,950 | 12% |
| $48,475-103,350 | $96,950-206,700 | 22% |
| $103,350-197,300 | $206,700-394,600 | 24% |
| $197,300-250,525 | $394,600-501,050 | 32% |
| $250,525-626,350 | $501,050-751,600 | 35% |
| > $626,350 | > $751,600 | 37% |
Plus state tax: 0-13.3% (CA highest, TX/FL/WA = 0%)
Plus NIIT (Net Investment Income Tax): 3.8% if MAGI > $200K (single) / $250K (MFJ)
Long-Term Capital Gains (held ≥ 1 year)
Federal:
| AGI (single) | AGI (MFJ) | Rate |
|---|
| < $48,350 | < $96,700 | 0% |
| $48,350-533,400 | $96,700-600,050 | 15% |
| > $533,400 | > $600,050 | 20% |
Plus state: same as ordinary (CA does NOT distinguish LTCG)
Plus NIIT: 3.8% if applicable
Quick rule of thumb (high earner, $400K+ income)
- STCG: 32-37% federal + 3.8% NIIT + state = 38-50%+ effective
- LTCG: 20% federal + 3.8% NIIT + state = 24-37% effective
- Difference: ~12-15% of gain
The 5-Step Workflow
Step 1 — Get user's input
Ask if not provided:
- Ticker + how many shares to sell
- Approximate income bracket (or just "high earner $400K+" / "mid $200K" / etc.)
- Buy date(s) for the lots being sold — CRITICAL for STCG vs LTCG
- State of residence (CA/NY/TX/FL/WA)
- Any浮亏 positions? (for tax loss harvesting)
Step 2 — Calculate STCG vs LTCG difference
gain_per_share = 13 - 10
total_gain = 1000 * 3
stcg_rate = 0.32 + 0.038 + 0.093
stcg_tax = total_gain * stcg_rate
stcg_net = (1000 * 13) - stcg_tax
ltcg_rate = 0.15 + 0.038 + 0.093
ltcg_tax = total_gain * ltcg_rate
ltcg_net = (1000 * 13) - ltcg_tax
savings = stcg_tax - ltcg_tax
Step 3 — Decision matrix
| Scenario | Action |
|---|
| Lots all > 1 year old | Sell freely (already LTCG) |
| Lots all < 1 year, market risk high | Hedge with puts, don't sell |
| Lots all < 1 year, will hit 1Y in <30d | Wait for LTCG, then sell |
| Lots all < 1 year, will hit 1Y in 60+ days | Hedge with put, hold to LTCG |
| Mixed lots (some > 1Y, some < 1Y) | Specific lot ID: sell long-term lots first |
| Position is huge (>15% portfolio) | Consider gradual sell over multiple tax years |
Step 4 — Recommend specific lot identification
If broker supports (most do — IBKR, Fidelity, Schwab, Robinhood):
- Use Specific Lot ID (not FIFO default)
- Sell highest cost basis first (HIFO) → reduces gain
- OR sell long-term lots first → favorable rate
Example:
| Lot # | Date | Shares | Cost | Days held | Gain/share | Tax type |
|---|
| 1 | 2024-09-15 | 5,000 | $5.50 | 600 | $7.64 | LTCG |
| 2 | 2025-03-20 | 8,000 | $8.20 | 410 | $4.94 | LTCG |
| 3 | 2025-09-10 | 5,000 | $11.00 | 240 | $2.14 | STCG |
| 4 | 2026-02-15 | 3,100 | $12.50 | 80 | $0.64 | STCG |
To sell 3,000 shares: Sell from Lot 1 (LTCG + lowest tax, highest gain $/share but lowest %).
Step 5 — Alternative: Hedge with Puts (NO TAXABLE EVENT)
If sell triggers high STCG, consider:
Buy ATM/OTM Put instead of selling:
- Pros: No taxable event, keep upside
- Cons: Premium cost (typically 2-5% of position value for 3-6mo cover)
Example for 1,000 shares at $13:
- Buy ATM Put × 10 contracts (covers 1,000 shares) ~3 months out
- Cost: ~$0.30 × 100 × 10 = $300 (~2.3% of position)
- Protects $13 floor — if stock drops to $11, puts gain $2/share = $2,000
- Net: $300 cost for $2,000 protection
- No tax event — keep stock until LTCG window opens
Cost comparison:
| Strategy | Tax cost | Hedge cost | Net cost |
|---|
| Sell now (STCG) | ~$1,350 | $0 | -$1,350 |
| Sell after LTCG (wait) | ~$840 | $0 | -$840 |
| Buy put + hold | $0 | $300 | -$300 |
Hedge typically wins by $500-1,000+ per 1,000 shares, KEEPS upside, position intact.
Step 6 — Tax loss harvesting (bonus alpha)
If user has 浮亏 positions:
- Sell loser to crystallize loss
- Loss offsets capital gains (dollar for dollar, no limit)
- Buy back after 31 days (avoid wash sale)
Example:
- User wants to sell 1,000 NOK with $2,800 gain
- User has 100 GDXU at $154 (cost $166 = $1,200 loss)
- Sell GDXU first: realize -$1,200 loss
- Sell NOK: realize +$2,800 gain
- Net taxable: +$1,600 (vs $2,800)
- Tax savings: $1,200 × 35% = $420 saved
- Wait 31 days, can rebuy GDXU if still bullish
Output format
# [TICKER] Tax-Optimized Trim — [Date]
## Inputs
- Ticker: [X], Shares to sell: N
- Avg cost: $X, Current: $Y
- Income bracket: [High/Mid/Low]
- State: [CA/NY/TX/etc]
## Tax Cost Analysis
### Scenario A: Sell Now (assumes STCG)
- Gross proceeds: $XX,XXX
- Total gain: $X,XXX
- STCG tax (X% effective): $X,XXX
- **Net to bank**: $XX,XXX
### Scenario B: Wait for LTCG (sell in [date])
- Gross proceeds: $XX,XXX (assumes price stable)
- LTCG tax (Y% effective): $X,XXX
- **Net to bank**: $XX,XXX
- **Savings vs Now**: $X,XXX
### Scenario C: Hedge with Put (no sale)
- Recommended put: [TICKER] [Date] $X Put × N contracts
- Hedge cost: $XXX
- Tax cost: $0
- **Net cash impact**: -$XXX (vs -$X,XXX in Scenario A)
- **Best if**: Long-term thesis intact, just want short-term protection
## Specific Lot ID Recommendation
| Lot | Buy Date | Days held | Suggested action |
| Lot 1 | YYYY-MM-DD | XXX | Sell first (LTCG, lowest tax) |
| Lot 2 | YYYY-MM-DD | XXX | Sell next |
**Broker instruction**: "Use Specific Lot ID, sell from Lot 1 (settled date YYYY-MM-DD)"
## Tax Loss Harvesting Opportunities
- [If user has loss positions]: Sell [TICKER] to realize -$X loss, offsets gain.
## My Recommendation
[Specific action: which scenario + why + step-by-step orders]
Hard rules
- Always ask for buy dates if not provided. Without dates, can't determine STCG/LTCG.
- Never recommend without state context. CA has no LTCG benefit; FL has no state tax.
- Show all 3 scenarios (sell now / wait / hedge). Let user choose.
- NIIT: Apply if income > $200K single / $250K MFJ.
- Wash sale rule: Cannot rebuy same security 30 days before/after loss sale. Use similar-but-different (NOK → ERIC for example).
- Don't recommend "sell" just for tax reasons. If thesis intact and stock undervalued, hedging is often better.
- Specific Lot ID requires broker setup BEFORE the sale. Tell user to call broker first if unsure.
Common scenarios
Scenario 1: All shares held > 1 year (LTCG)
- All long-term capital gain treatment
- Sell freely if you want to trim
- Recommendation: Standard trim, no special tax planning needed beyond LTCG
Scenario 2: All shares held < 1 year (STCG)
- Example: 1,000 shares at $230 avg cost, now $250 (6 weeks held)
- Sell now: ~35% on $20K gain = $7,000 tax
- Wait 11 months: 18.8% = $3,760 tax
- Hedge with put until LTCG: cost ~$2K, save $5,000 net
Scenario 3: Tax loss harvesting
- Have a winner with $10K LTCG
- Have a loser with $5K loss in unrelated position
- Sell loser to crystallize loss + sell winner for gain
- Net taxable: $5K (vs $10K alone)
- Save $1,000-2,000 in tax (depending on bracket)
- Wait 31 days before rebuying loser (avoid wash sale)
Tool cheat-sheet
| Need | Tool |
|---|
| Current price | mcp__yfmcp__yfinance_get_ticker_info |
| Put options for hedge | mcp__yfmcp__yfinance_get_option_chain (puts) |
| User's specific positions | Ask user, OR review review-investment-screenshot |
Pro tips
- December is for harvesting — review portfolio for losses to crystallize.
- January 1 resets — short-term holdings cross to long-term throughout year.
- Married couples have $94,250 LTCG 0% bracket (2026) — useful for low-income years.
- Roth IRA holds — no tax on gains. Use for high-turnover ideas.
- HSA holds — same as Roth, plus tax-deductible contribution.
- Avoid "constructive sale" — covered call deep ITM = IRS may treat as sale.
When to invoke
- User asks: "Should I sell X now or wait for LTCG?"
- User asks: "How much tax will I pay if I sell N shares?"
- User asks: "How can I trim without paying high taxes?"
- After
analyze-stock recommends trim, BEFORE executing
- Year-end (Dec) tax planning
