I have a problem and it is Facebook. No, I don’t check it 500 times per day. The problem is that the stock is eating my portfolio:
On The Hook With Facebook
In May of 2012, I bought 1,000 shares of Facebook when it went public at about $41. And then it dropped, so I bought more. And then it continued to drop, so I continued to add to my position. When the dust had settled, I had bought another 1,000 shares and brought my cost basis down to about $30.
My hypothesis was simple; I thought that Facebook would smoothly move to mobile (it was a desktop experience in 2012) and that the service would be successfully monetized. Both happened and the stock now sits at around $190. I’ve since sold 550 shares, but still hold 1450 or about $275,000.
Facebook is, by far the largest investment I own. And it terrifies me. Facebook is a social network and at some point, users will get bored and move on to something else. I don’t want to be caught holding the Facebag. However, big tax bills also terrify me. But, I figured out a way out of it.
How To Pay Zero Capital Gains
For the early retiree, long-term capital gains may not be an issue. This is because you pay $0 in federal taxes if your taxable income plus your capital gains are under a certain threshold. For a married couple, it’s $77,200 and for a single person, it’s $38,600:
Chart from Nerdwallet.
So, let’s say you’re married, earn $50,000/year and have $20,000 in long-term capital gains; you pay $0 in taxes for the stock sale.
However, my personal