Contact Information: Contact: Henry Stimpson Stimpson Communications 508-647-0705 Henry@StimpsonCommunications.com Jerry Miccolis Brinton Eaton 973-984-3352 miccolis@brintoneaton.com
This Year's Volatile Market Offers a Golden Opportunity to "Harvest" Tax Losses, Brinton Eaton Says
| Source: Brinton Eaton Wealth Advisors
MORRISTOWN, NJ--(Marketwire - October 17, 2007) - This year's volatile market offers a golden
opportunity to "harvest" tax losses, says Jerry Miccolis, a senior advisor
with Brinton Eaton Wealth Advisors in Morristown, NJ. "It's a
have-your-cake-and-eat-it-too strategy if you do it right."
Suppose Jane Doe sells her entire $50,000 position in a mid-cap index ETF
(Fund A) at, say, a $5,000 short-term loss and immediately invests the
proceeds in another ETF (Fund B) that tracks the same index.
"Jane made the right move. She has stockpiled tax losses while leaving her
asset allocation unchanged," he says.
Her loss can be used to offset any realized gains. So if Jane sells her
shares in XYZ Technology for a $5,000 short-term gain this year, she won't
pay additional tax. If she doesn't have any realized gains, she can offset
up to $3,000 in ordinary income and carry over the remaining $2,000 to
future years.
"It's a no-lose situation, as long as you only do it when the tax loss is
sizeable enough that the benefit outweighs the trading costs," says
Miccolis. "And with the proliferation of ETFs -- many that track the same
or similar indexes -- the opportunities are there. But trades have to be
timed right. With less than five months to go in the year, start planning
now."
You shouldn't sell and buy back the same security within 30 days. The IRS
calls this a "wash sale" and disallows the tax loss.
A senior financial advisor with the firm, Miccolis holds the Chartered
Financial Analyst (CFA) and Certified Financial Planner (CFP) designations
and is a Fellow of the Casualty Actuarial Society (FCAS) and a Member of
the American Academy of Actuaries (MAAA).
Brinton Eaton Wealth Advisors is a fee-only financial-planning,
tax-advisory, and investment-management firm in Morristown, N.J. Web:
http://www.brintoneaton.com.