End of Year Tax Strategies

Your investments;

Tax strategies need to be implemented prior to year end. The system allows for doing your taxes after the year end after it is too late to make strategic moves.
No one can give guaranteed advice without taking risks. So it you don’t think the stock market is going to bounce back, and you have some serious capital gains, it may well be time to unload any bad stocks.

Remember that capital gains and losses can not be applied against your salary or business income. They can only be applied to your capital gains and losses basket. The odds work in the tax man’s favour here. More people lose money in the markets than they make. So; so long as you understand the concept of capital gains and losses is to put money in the tax collectors pockets, you can make better buy and cell decisions.

By selling losing stocks before the end of the year, you can reduce tax that might otherwise be payable on capital gains you already made in 2008.

Also consider that you can trigger a refund of any 2005, 2006 or 2007 capital gains taxes you’ve already paid, by carrying it back.

Consider also the cost associated with buying and selling. The stock market industry pays out a handsome profit for those who choose to use their services. Part of wise investing is to be very clear on the costs involved in each transaction.

Do not sell stocks until after 31 days of acquiring them to avoid falling into the `Superficial Loss` Trap. If you sell a stock to trigger a loss, and any related person (your spouse, a trust or corporation you control) purchases it shortly thereafter, you’ll end up in trouble. The superficial loss rules prevent you from using the capital loss if you or your affiliate buys an identical property during the period that begins 30 days prior to the sale and ends 30 days after the sale. So, if you or your spouse actually wants to buy back the same investments, you’ll have to wait at least 30 days.

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