This varies a lot by state though. Some states like Florida and Texas don't have income tax at all, while others like California tax capital gains as ordinary income at rates up to 13.3%. Where are you located, OP?

You're absolutely right about harvesting gains while you have losses to offset them! This is actually one of the smartest tax moves you can make in your situation. Since you're required to use all $93k in carryover losses anyway, realizing additional gains now means you're essentially getting "free" tax treatment on those gains (up to your remaining loss amount). For wash sale tracking, most major brokerages (Fidelity, Schwab, etc.) will flag potential wash sales on your year-end statements, but they don't catch everything - especially trades across different accounts. I've found that keeping a simple spreadsheet with ticker symbols, dates, and amounts for any stock you buy/sell within 30 days helps catch the ones your broker might miss. Just be careful not to get too aggressive with the gain harvesting - you still want to make sure any trades you make align with your overall investment strategy, not just tax optimization. But in your case with $47k in remaining loss capacity after your big trade, there's definitely room to be strategic about it!

You're absolutely right about harvesting gains now while you have losses to offset them! This is actually a smart tax strategy called "loss harvesting in reverse." Since you're required to use all your carryover losses anyway, realizing additional gains this year means you're essentially getting "free" gains up to the amount of your remaining loss carryovers. For wash sale tracking, most major brokerages (Fidelity, Schwab, etc.) will flag potential wash sales on your statements, but they don't always catch everything, especially if you have accounts at multiple brokers. TurboTax and similar software can help identify some wash sales, but for active traders, manual tracking in a spreadsheet is often the most reliable method. One thing to be careful about - make sure you're calculating your remaining loss carryover correctly after applying it against your $140k gain. If you have $93k in losses and $140k in gains, you'll have about $47k in net gains that will be taxed. Any additional gains you realize will be fully taxable since you'll have exhausted your loss carryovers. Also consider the timing of when you realize any additional gains - if you're making estimated quarterly payments, additional gains late in the year might require you to adjust your Q4 payment to avoid underpayment penalties.

That's really smart! I've actually been thinking about taking some programming courses to help with my career. Would those count as qualified expenses even though they're not for a degree program? And does it matter if they're online courses?

Yes, courses don't necessarily need to be part of a degree program to qualify as educational expenses for Coverdell purposes. The key is that they need to be offered by an eligible educational institution - typically accredited colleges, universities, or vocational schools. Online courses can absolutely qualify as long as they're offered by eligible educational institutions. Many community colleges and universities offer online professional development and certificate programs that would work perfectly. Just make sure you're enrolling directly through the educational institution rather than through a third-party platform like Coursera or Udemy (unless the specific course is officially offered by an eligible institution through those platforms).

Is there a limit to how many times you can change beneficiaries? Could you theoretically keep changing it to younger relatives forever to avoid ever paying taxes on it?

There are some restrictions on beneficiary changes that prevent indefinite rollovers. The new beneficiary must be a family member of the original beneficiary and must be under age 30. You can change beneficiaries, but each change needs to meet these criteria and there are annual contribution limits that still apply to the account overall. The IRS has provisions to prevent people from gaming the system by endlessly rolling accounts between family members. Also, keep in mind that changing beneficiaries can have gift tax implications if the new beneficiary is in a different generation (like from a child to a grandchild).

Exactly right. The IRS computers automatically match 1099-INTs to tax returns, and if they can't find a match, that can trigger a notice or audit. They'll issue the 1099-INT in the deceased person's name and SSN, which can complicate things.

Does anyone know if H&R Block's software handles carryovers better than TurboTax? I'm thinking of switching but don't want to lose my carryover tracking.

Whoa, that sounds like a nightmare scenario! How did you figure out it was wrong? Did your brokerage statements look different or did you only notice when tax forms came?

I noticed it when I got a sudden notification about a bunch of "transactions" in the account that I hadn't initiated. My account balance temporarily disappeared and then reappeared a day later. Then when I logged in, all my cost basis information was showing the purchase dates as the transfer date instead of the original purchase dates. I immediately called the brokerage and they confirmed they had processed it incorrectly. The fix took about two weeks, and they had to issue corrected tax forms. Definitely keep an eye on your account activity around the transfer date and check that your cost basis information remains intact after the transfer completes.

Ah that makes sense. I think he was just worried about me selling those positions at a loss. So basically once I hit the transfer age, I take control of the whole account whether we "officially" move it to a new account type or not?

Exactly! Once you reach the age of majority, you legally become the owner and controller of all the assets in the custodial account. Your dad's concern about selling at a loss is understandable, but remember that taking control doesn't mean you have to sell anything immediately. You can hold onto those underperforming positions as long as you want and wait for them to recover - the decision is entirely yours once you have control. The timing of when to sell (if at all) becomes your investment strategy decision, not a requirement of the account transfer process.