The Motley Fool Discussion Boards

Previous Page

Financial Planning / Tax Strategies

URL:  http://boards.fool.com/on-thu-22-may-97-122721-0600-jamerz-wrote-10005007.aspx

Subject:  Re: Foolish Four IRA? Date:  5/22/1997  3:57 PM
Author:  TMFTaxes Number:  23 of 121216

On Thu, 22 May 97 12:27:21 -0600, jamerz wrote:
<<

I have recently purchased the Foolish Four through my discount broker. Can I now take those four stocks and separate them from the rest of my securities as an IRA? And if so, will I avoid paying capital gains taxes each year when I turn the portfolio over?

Also, how do you feel about selling call options on Foolish Four holdings, say, three months before it's time to turn the portfolio over? And can this strategy be used in an IRA?>>

You are only allowed to establish an IRA account when you are qualified to do so. You can not simply "carve out" a portion of your portfolio and transfer that part of your portfolio into an IRA account.

If you ARE able to make IRA contributions (generally $2,000 per year...could be deductible...maybe not depending upon your specific circumstances), and are able to build up your account to such an extent to handle your Foolish 4 investments, you will then be able to purchase those investment directly in the IRA. And, as you correctly point out, any gains in an IRA account are not subject to tax until the money is taken out of the IRA. Makes the recordkeeping VERY easy.

As far as the options strategy, you might want to take that question over to TMF DowMan, the Foolish 4 specialists. To my thinking, it doesn't make any sense. First, it invalidates the modes. Second, I don't quite see the point of it all. But I'm biased against options for most people, so my response may be somewhat tainted.

TMF Taxes
Roy Lewis
Copyright 1996-2014 trademark and the "Fool" logo is a trademark of The Motley Fool, Inc. Contact Us