Q. Most planning programs do not ask for the amount of unrealized gains in a taxable portfolio. My gains are very high, so I know I won’t be able to get as much income as these planners show. What should I do?
A. The simplest thing to do is to subtract the tax that will be due on unrealized gains (capital gains rate times net of market price less cost basis) from the entry for your taxable investment balance. The Pre and Post Retirement Planner from www.analyzenow.com has a special entry tab that allows you to distribute the tax either in particular years or on a regular basis over your retirement.
There are other things that you should consider before taking any tax planning steps. If this is an investment that will be left to your heirs, the tax will be forgiven, at least in current tax law which marks the cost basis up to the market value on the date of your death. Another thing to consider is that highly appreciated securities are great for charitable gifts. They also are suitable for gifts to low income children who will have to pay the tax but perhaps at a lower rate.