A worked example
The exit that went the other way
Priya, 39, single. Six years of buying and exercising put $1.2M of her own money into her company's stock. It sold last month, the preference stack took the proceeds, and common cleared $250k. She is back on someone else's payroll at $210k.
“I put $1,200,000 into that stock and $250,000 came back. What is a loss like that actually worth — should I convert to Roth against it, or sell the shares I still hold in the company before this one?”
What the projection shows
What §1211 does with a capital loss: the $3,000 a year that reaches ordinary income, what is left waiting at the end of thirty years, and the difference between spending it on a Roth conversion and spending it on a gain — including selling part of the account and buying straight back, which changes nothing about what she owns and everything about what the loss is worth.
What else the projection found
Nothing here was left blank. These follow from the figures above, under the assumptions this example states.
- The plan finishes still carrying $863,000 of capital losses while $2,457,333 of untaxed gain sits in the same brokerage account — because a loss reaches ordinary income only $3,000 a year.
- The plan finishes still carrying $863,000 of capital losses while $2,359,167 of untaxed gain sits in the same brokerage account — because a loss reaches ordinary income only $3,000 a year.
- The plan finishes still carrying $110,079 of capital losses while $1,704,412 of untaxed gain sits in the same brokerage account — because a loss reaches ordinary income only $3,000 a year.
- The plan finishes still carrying $113,000 of capital losses while $3,902,691 of untaxed gain sits in the same brokerage account — because a loss reaches ordinary income only $3,000 a year.
The planner arrives with this household already filled in. Change anything — the balances, the ages, the assumptions — and run it as yourself.
A projection under stated assumptions, not financial or tax advice.