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Hello TMFTaxes,

If you look in your tax manual (page D-4 of the IRS 1998 1040 tax manual) under short term capital gains, it references two methods that one may use to Defer
the payment of "Short Term" capital gains. One of the methods is to purchase common stock within 60 days of selling a security which will be subject to short
term capital gains. I am simply looking for a definition of common stocks and, weather or not can I purchase Common Stock for Microsoft or AOL from my broker.

In addition has anyone invested in Specialized Small Business Investment Companies (SSBIC) or purchased Common Stock in an attempt to defer short term capital gains? If yes, please explain how I can benefit from using one of the methods described above?
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If you look in your tax manual (page D-4 of the IRS 1998 1040 tax manual) under
short term capital gains, it references two methods that one may use to Defer
the payment of "Short Term" capital gains. One of the methods is to purchase
common stock within 60 days of selling a security which will be subject to short
term capital gains. I am simply looking for a definition of common stocks and,
weather or not can I purchase Common Stock for Microsoft or AOL from my
broker.


Never hear of this and do not know the book you site.
Do the footnotes reference a code section or rev rule? Is there a publication number for the tax manual?

I think common stock would be any publicaly traded company. This can not be correct because may of use have short term profit and buy common stock within 60 days of the sale and pay tax on the gain. But I think we are all willing to learn new tricks.
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It is the 1998 1040 instruction booklet (catelog number 11325E). The book is available in any post office in the US and I am referring to the section titled "Specialized Small Business Investment Companies (SSBICs) on page D-4. This section reads as follows.


"If you sold publicly traded securities, you may be able to postpone all or part of the gain on that sale if you bought common stock or a partnership interest in an SSBIC during the 60-day period that began on the date of the sale. An SSBIC is any partnership or corporation licensed by the Small Business Administration under section 301(d) of the Small Business Investment Act of 1958. You must recognize gain to the extent the sale proceeds exceed the cost of your SSBIC stock or partnership interest purchased during the 60-day period that began on the date of the sale (and not perviously taken into account). The gain you postpone is limited to $50,000 a year and $50,000 during your lifetime (reduce these amounts by one-half if you are married filing separately). Reduce the basis of your SSBIC stock of partnership interest by any postponed gain. If you choose to postpone gain, report the entire gain realized on the sale on line 1 or 8. Directly below the line on which you reported the gain, enter in column (a) "SSBIC Rollover" and enter as a (loss) in column (f) the amount of the postponed gain. Also attach a schedule showing (a) how you figured the postponed gain, (b) the name of the SSBIC in which you purchased common stock or a partnership interest, (c) the date of that purchase, and (d) your new basis in that SSBIC stock or partnership interest."
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If you look in your tax manual (page D-4 of the IRS
1998 1040 tax manual) under short term capital gains,
it references two methods that one may use to Defer
the payment of "Short Term" capital gains. One of the
methods is to purchase common stock within 60 days
of selling a security which will be subject to short
term capital gains. I am simply looking for a definition
of common stocks and, weather or not can I purchase
Common Stock for Microsoft or AOL from my
broker.

In addition has anyone invested in Specialized Small
Business Investment Companies (SSBIC) or
purchased Common Stock in an attempt to defer short
term capital gains? If yes, please explain how I can
benefit from using one of the methods described
above?


In my first reply I did not realize that the second paragraph related to the first. Sorry.

This is section 1202 stock.

The purchased co must have assets of less than $50,000,000. I think you can skip Microsoft and AOL.

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Since the companies that I am allowed to purchase common stock in is limited to owning assets that amount to less that 50,000,000, my selection is very limited. Thank you for your response.


Take Care rjm1
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t901317 wrote: "Since the companies that I am allowed to purchase common stock in is limited to owning assets that amount to less that 50,000,000, my selection is very limited. "

Actually, it's worse than that.

At the top of the thread, t901317 wrote: "If you sold publicly traded securities, you may be able to postpone all or part of the gain on that sale if you bought common stock or a partnership interest in an SSBIC during the 60-day period that began on the date of the sale. An SSBIC is any partnership or corporation licensed by the Small Business Administration
under section 301(d) of the Small Business Investment Act of 1958. "

So the corporation must be specifically licensed by the SBA for particular purposes. Investing in small businesses, it sounds like. You may be able to find such companies throught he SBA.
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[[If you look in your tax manual (page D-4 of the IRS 1998 1040 tax manual)
under short term capital gains, it references two methods that one may use to
Defer
the payment of "Short Term" capital gains. One of the methods is to purchase
common stock within 60 days of selling a security which will be subject to short
term capital gains. I am simply looking for a definition of common stocks and,
weather or not can I purchase Common Stock for Microsoft or AOL from my
broker. ]]

I don't know what you are reading, but I think that you are making a bad interpretation. Believe me: If you sell your shares for a gain, you owe the taxes.

If you would like to wait until after April 15th and then post, word for word, what you are reading, I'll be glad to take a look at it and help you out with it.

TMF Taxes
Roy
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[[It is the 1998 1040 instruction booklet (catelog number 11325E). The book is
available in any post office in the US and I am referring to the section titled
"Specialized Small Business Investment Companies (SSBICs) on page D-4.
This section reads as follows.]]

right...but in order to to this, you have to find a qualified SSBIC. THAT is the difficult part of the problem. SSBICs don't just grow on trees.

I agree that this is possible. But effectively, it is VERY difficult.

TMF Taxes
Roy
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