Escrow of Capital Gains Taxes on Stocks and Bonds
posted by Gerard Magliocca
Here’s a question for tax experts out there. Why don’t brokerages escrow capital gains taxes in a manner similar to a bank escrow of property taxes on a mortgage? It would seem to make sense from the perspective of the customer (you wouldn’t have to pay capital gains as a lump sum every quarter or every year), and from the perspective of the IRS (they could more efficiently collect taxes from a small group of brokerage firms and could, in theory, collect them in real time)? Is there any reason why this practice is not used?