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Author: badbat One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 121095  
Subject: Taxes,mutual funds,credit card Date: 5/18/1999 10:58 AM
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I would love to cash out a well preformed (past) mutual fund and take a hugh bite out of my credit card,
but how can i do this with being attacked by the IRS bug??

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Author: Bob78164 Big red star, 1000 posts Old School Fool CAPS All Star Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 15545 of 121095
Subject: Re: Taxes,mutual funds,credit card Date: 5/18/1999 11:51 AM
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badbat writes:

I would love to cash out a well preformed (past) mutual fund and take a hugh bite out of my credit card, but how can i do this with being attacked by the IRS bug??

I reply:

You can't, but I'll bet if you run the numbers it's still worth it by a wide margin. After all, you'll pay those taxes sooner or later. By the way, don't forget to include reinvested distributions in your basis; they will help reduce the tax bite. Congratulations on your Foolish planning and action! --Bob

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Author: UUinMN Three stars, 500 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 15546 of 121095
Subject: Re: Taxes,mutual funds,credit card Date: 5/18/1999 11:52 AM
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In brief, you can't. When you sell at a profit, you generate taxable income. There are a number of ways to reduce your tax liability:

1. Delay the sale until you have long-term capital gains.
2. Specify which shares to sell, so your basis is as high as possible. (This postpones tax on the other shares, with lower basis.)
3. Be sure you include reinvested dividends in your basis. Don't pay taxes twice on the dividends!
4. If you itemize, increase your charitable giving in the year you have capital gains.
5. Give some of the shares directly to a charity. You avoid taxes on the gain, and get a deduction for the full value. This could free up dollars to pay down your credit card, if you've been giving to charity already.

Congratulations on your gains.

Michael

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