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Author: PuddinHead42 Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 121061  
Subject: Re: Tax Cap Gains Strategies Date: 12/9/2007 1:14 PM
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Well, one man's simple & basic is another man's "why would I put myself through that to possibly pay more in commissions than I save in taxes plus have myself out of a loser that I see great prospects for at the exact moment when it takes off?"

Since I'm from Kansas I tend to look at things more simply. If I have a paper loser in my portfolio it's because I think it has promise as an investment, not because I'm waiting to harvest a tax benefit. If I had lost faith in the investment (been there, done that) I would have sold it back when that happened. Instead of looking at the $10,000 I invested, I'm better off looking at the $1,000 that I can get out of it to invest someplace more promising.


Ah, but let's say I think banks are bottoming out and I could not decide on whether to buy Citi or Bank of America. So, maybe I bought BAC and have a $1000 loss. Now I can sell BAC for $8 commission and buy C and still be in the banks I like, but now I can write off $1000 against my income, so if I am at a 35% rate, then that is $350 dollars I don't need to send the gov. Minus $8 commission, I have $342 saved (but commission increases basis, so I get 35% off that cost too). Also, I might well believe that I can buy BAC back in 31 days and avoid the wash rule. Who am I to say a stock is "about to take off", if I was that smart I would not be sitting on a loss ;-)

I don't buy and sell based on taxes, but at the end of the year, if I have $10,000 in short gains and the gov will take $3500 of that, then I might look at some ST loss positions and consider using those to my advantage.

P.
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