low basis stock

each year, someone swaps out 10% of his concentrated low basis holding to s&p, can he get away with his low-basis situation without paying any tax since there’s no capital gain?

I would say yes, since nothing was sold. Nothing (gain/loss) was realized for tax purpose.

so, this one is even better than completion portfolios?

how do you “swap” out…you will likely have to recognize any capital appreciation if it is a true swap and not a derivative swap, i could be wrong though.

Your basis will not change you will still eventually have to pay the capital gains tax, but you are able to diversify your portfolio through this much like Exchange funds which let you diversify but will not change your cost basis.

i guess some OTC swap would allow simply exchanging two seurities with no cash flow involved. if the swap is fairly priced, then capital GL would be zero. the reason i ask is b/c a question i am working on. one top executive of a company with loads of company’s stocks. i need to help him to diversify with minimum tax consequence. swap is among a bag of tools i can choose from. given swap is not the one listed as effective ways to deal with low-basis, i am wondering if i can rule it out.

Mr.Good.Guy Wrote: ------------------------------------------------------- > Your basis will not change you will still > eventually have to pay the capital gains tax, but > you are able to diversify your portfolio through > this much like Exchange funds which let you > diversify but will not change your cost basis. How?? Can you tell me, mechanically, how this is done??

I think it should be possible to swap out, because I remember a related situation where a company executive with a large holding of company stock is able to diversify out by swapping the retrun with an index. Isn’t this a similar case, except that the situation is to get out of a low basis stock?