AT&T Inc (T)

[GreedyAgorist]

The tax on tomorrow's dividend will be 15% for many people; not all, of course. At any rate, at any income level, it should be less than it would be for anyone’s short term cap gains, like for swing trades and options premiums. Perhaps that is why I did indeed trade this in an IRA.

Unfortunately for me, I did not have sufficient faith in this rally, so I already “sold cheap” as I like to phrase it, meaning I already sold a covered call on T. My shares might even get “called away” early before collecting the dividend. That will cut my profits... well, by about as much as it would if there were tax collectors coming to take a piece of the action.

That was my point in the earlier post. It is easy to say trade in an IRA, but I would imagine many have both IRA’s and taxable accounts, so the question was what to do with one, and what to put in the other. Buying and holding blue chip dividend champs might be what to do in a taxable account. While, counter-intuitively, short-term trades might be less of a headache in an IRA. (Don’t get me started on Wash Sales, for instance; I thought I avoided them religiously last year, but, darn it!... if it weren’t for that one time, I would not need the extra three months to fill out my tax forms. Ouch!)

I should note some dividend payers are definitely better placed in an IRA. I am thinking REITs and closed end funds... I have one whose dividends are half qualified and half not. Also, partnerships like Blackstone (BX) and gas-movers like EPD; thank goodness I never held those in a taxable account.

Having said all that, you can’t sell losers for a tax loss in an IRA.