Monday, January 8, 2007


As much as we dislike paying taxes on capital gains, it is a lot better to have gains to pay tax on instead of losses to deduct. Even if you are in the 35% bracket your tax on capital gains is only 15%. To make losses worse, you cannot deduct more than $3,000 in net capital losses; e.g. if you lose $10,000 on Stock A and gain $ 5,000 on Stock B, you can only take $ 3,000 as a deduction. The other $2,000 can be carried forward to the next year.

There are some ways you can minimize your losses and maximize your gains following the tried and true policy of letting your profits run and cutting your losses short.

Cutting losses can be as important as letting profits run. If you let your broker advise you, he may be more interested in maximizing his commissions than maximizing your gains and minimizing your losses. For that reason, I rely more on the advice of an Investment Advisor whose weekly newsletter I’ve been following for some time. Recently he established a blog from which you can link to his weekly updates, which he provides at no cost.

LINK to the blog: (Ulli, the Wall Street Bull)

I read his blogs every day and study the detailed report he sends every week. He lists numerous mutual funds and ETFs and some statistics as to performance and gives buy and sell recommendations designed to keep you invested in a bull market and keep you on the sidelines (or in Bear market funds) during a bear market. Whether you follow his suggestions or not, it is interesting and well-written reading. You might discover some investment opportunities you didn’t realize existed such as ways to earn higher tax-free interest.

LINKS and Other IRS References and Resources


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This information is not intended to be advice to the recipient. In compliance with Treasury Department Circular 230, unless stated to the contrary, any Federal Tax advice contained in this Blog was not intended or written to be used and cannot be used for the purposes of avoiding penalties.


Anonymous said...

Ref. by Ulli.
IRA Required Minimum Distribution
I have five different IRA's. Do I have to take the minimum from each or from the total.
Many thanks for this valuable service.

taxxcpa said...

Add all five. If you have $ 100,000 in each of five, you would divide $ 500,000 by the appropriate life-table amount for your age. I have an excel worksheet that calculates it at:

taxxcpa said...

I should have added you can take all of the required withdrawal from just one IRA. My wife has one small traditional IRA and a larger rollover. She is going to take all the money out of the small one and then enough from the larger one to meet the requirement.

Another thing: The withdrawal doesn't have to be all cash. You can transfer stocks and bonds from your IRA into a non-IRA account and that counts toward the RMD.

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