Nobody likes paying any more tax than necessary. For long-term investors, one key tax break is available to everyone, even though many investors never take advantage of it.
In the following video, Dan Caplinger, The Motley Fool's director of investment planning, looks at the biggest tax break long-term investors get: the ability to time their capital gains. Dan notes that if you hold stocks for the long run, you never have to pay tax on capital gains until you sell them. Moreover, if you pass them on to your heirs unsold, they'll receive a stepped-up tax basis in the shares, essentially allowing them to avoid tax on those gains entirely. Dan discusses the impact of this tax break on investors in Altria (NYSE:MO), Wal-Mart (NYSE:WMT), Oracle (NYSE:ORCL), and Microsoft (NASDAQ:MSFT) over the decades, as well as the potential for shareholders in additional stocks to reap the benefits of this tax break.
Be smart about your taxes for 2014
Knowing the tax advantages of long-term investing is just one way you can cut your tax bill to Uncle Sam. In our brand-new special report "How You Can Fight Back Against Higher Taxes," The Motley Fool's tax experts run through what to watch out for in doing your tax planning this year. With its concrete advice on how to cut taxes for decades to come, you won't want to miss out. Click here to get your copy today -- it's absolutely free.
Fool contributor Dan Caplinger has no position in any stocks mentioned. The Motley Fool owns shares of Microsoft and Oracle. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.