Stocks bought after 2000 can qualify for a new LT cap gains rate of 18% if held for five years (if you are in a tax bracket over 15%)For purchases before the year 2001 you can still qualify for the 18% LT cap gains rate if you declare a 'deemed sale-and-repurchase' of the stock, using the price on January 2, 2001 as the date for calculation of gain. You would still have to hold the stock for 5 more years to qualify for the 18% LT cap gains rate.The questions I have are, 1: (a silly question) Does this apply to mutual funds as well (I assume it applies to any long term holding);and 2: Can you use this 'deemed sale-and repurchase' clause to take capital losses as well? After the year 2000, I have enough ST and LT losses to make declaring this 'deemed sale-and-repurchase' option look very worthwhile. The only caveat is that if it is a ST or LT loss does using this 'deemed sale-and-repurchase' clause cause wash sale rules to come into effect?If there are any errors in my interpretation of the new capital gains rules please let me know. As a predominantly buy and hold investor the extra 2% savings in taxes would make a big difference over the long run.
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