To help you close out 2005 on the best note, we
are sending out a four part series. Expect one
every other day until the end of the year.
Part Four
Year-end is an opportune time to review and
rebalance your investment portfolio. Only you can
decide whether you want to hold or sell a
particular investment, but if you decide to sell,
here are some year-end tips for keeping the tax
consequences to a minimum.
* Adjust your cost basis for reinvested
dividends. If you forget to make this adjustment,
you’ll pay more tax on your gain or have a smaller
capital loss.
* If you decide to sell just to rebalance your
portfolio, consider selling investments in your
IRA or 401(k) where sales can be done without
paying taxes.
* Selling some losing stocks can offset capital
gains on the winners you sell. If you have more
losses than gains, you can use the excess to
offset up to $3,000 of ordinary income.
* If you sell some but not all of a mutual fund
or stock, sell the highest cost shares first to
minimize your taxes. You must specify the
particular shares you’re selling at the time of
sale.
* Consider donating appreciated stock to
charity in lieu of cash; you can generally deduct
the appreciated value and avoid paying any tax on
your gain.
For assistance with the tax issues in your
year-end investment review, give us a call.
