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Financial Planning / Tax Strategies
|Subject: Question - $3000 tax writeoff||Date: 9/25/2005 10:17 PM|
|Author: eurobask||Number: 80842 of 122579|
I am looking for advice on the best strategy to handle selling of Tyco (TYC) shares that are considerably lower than what I bought them at a few years ago, in hopes of taking advantage of reducing my taxable income by $3000. Do I sell the shares that have dropped in price the most first, and then do the same in the coming years, up to the $3000 tax-writeoff limit, until I have sold all my shares? I say this with my belief that Tyco shares will not be appreciating at a higher rate than what I can find elsewhere, especially with the fact they don't have a huge dividend yield (1% I think, not much for a large conglomerate, and one that's trying to pay off a huge amount of debt).
A recent Fool.com article does have me wondering though, "Should I hold?". Warren Buffet, it was announced recently in a Fool article, has even purchased 5 million shares of TYC (http://www.fool.com/News/mft/2005/mft05081609.htm?ref=foolwatch ), as I do agree it is a solid company now. But, prior to getting any feedback from this post, I'm inclined to sell at this point, and reinvest the cash in some other, more promising stocks.
I used to work for Tyco International (Dennis Koslowski has made it famous) from 2000 to 2002, which covered the period when their stock made them Wall Street's darling at $60/share at the end of 2001/beginning of 2002. Tyco hit bottom, near $6 in June/July of 2002, as is now back up to $28.93 as of Friday. .
Well, during that time, I got caught up in the fervor and bought $13,340 in shares, dollar-cost averaging each month (about 270 shares I own now) from December of 2000 to March of 2002. I actually only paid $11,600 with a 15% discount through an ESPP employee stock purchase plan for the $13,340 in value of TYC stock. I should have been more cautious and done due diligence, but honestly didn't understand much at all then about valuation of stocks at that time. I just saw the 15% discount for a "hot" stock and wanted to begin investing, as I was just out of college.
So with that said, would anyone have advice on how best to handle my situation?
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