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My elderly mother has a trust with one of the large investment firms. To my deep regret, they have discretionary investment authority. One of their investments for her was into an aggressive growth fund (their own, naturally) in early 2000. Need I say more?

The fund had dropped over 40% when I convinced her to tell the trustee to sell the fund in mid-2001. After first ignoring her instructions, they finally sold it and remitted the proceeds. We were confident we could take the full loss for tax purposes.

Two months after the sale, the quarterly trust account statement came. It, of course, showed the sale at the full capital loss. However, on the same day as the sale, they "purchased" for the account that same fund at an amount of nearly 40% of the loss. So it appears we can't use that portion of the loss against 2001 or future taxes since it was acquired within 30 days (30 minutes, maybe?) of the sale.

The company wrote that this was a distribution. We've asked them for more information but they haven't responded to that yet.

We would appreciate any thoughts.





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