Message Font: Serif | Sans-Serif
No. of Recommendations: 9
I'm trying to minimize my income tax and don't have any significant interest in holding either of these funds.

Since you don't want to own either of these, the investment decision seems to be sell them both. But you do have a tax opportunity here.

I'd sell the losing fund right now - before Dec 31. Take the $3k loss this year against ordinary income at your marginal rate - perhaps 27%. Carry over the balance of the loss to 2003. That would save $810 in current taxes.

Then sell the other fund after Jan 1. Pay the tax on that gain a year from now, after offsetting by your capital loss carryforward. That should be a 6k gain offset by a 4500 loss carryforward, for a net LT gain of 1500. That would be taxed at 20% or $300.

Net savings over the the two years is $510.

Selling both funds right now would reduce your income by $1500 at ordinary rates again assumed to be 27%. That would reduce your current taxes by only $405. That's $105 less that the plan above.

Print the post  


In accordance with IRS Circular 230, you cannot use the contents of any post on The Motley Fool's message boards to avoid tax-related penalties under the Internal Revenue Code or applicable state or local tax law provisions.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.