HELP.. have done well the past few months and already
dreading the tax man in 08. What can I do to off set some
of the gains in 07.

For example, our club meets monthly at a local resturant to
discuss stocks.. Would the dinner quality ?

Sorry Eric, food doesn't qualify as a deductible expense. The only thing you
can do at this point is offset those gains with losses from the same time
period. But the year is young! <G>

Most of our clubs have fairly small dues; $25-$50 per month. Unless you are
in an older club and someone cashed out with thousands of dollars at stake,
gains divided by 8 to 10 or more members really doesn't equate to that much
at the end of the year.

If you can tell us the size of the gain and why you have it, maybe we can
give you some ideas about how to keep from getting there again. For
example, many clubs have large gains if the cash out a member. Changing
your payouts from cash to stock stops that kind of gain.

Lynn Ostrem, Vice President and Education Chair
Crow River Investment Club
garbagecop@earthlink.net
www.bivio.com/crowriver

I'm not exactly sure if your concern is about realized or
unrealized gains. You should be celebrating if you have
large unrealized gains.


> The only thing you can do at
> this point is offset those gains
> with losses from the same time
> period.

If you anticipate having large realized gains in 2008, the
question becomes what's the reason for selling stocks in
2008. As Lynn mentions, if it's to pay withdrawing members
in cash there is a better way (transfer appreciated stock
instead).

However, if the selling is to move the money into better
investment alternatives, paying taxes when you do that is
part of investing. You certainly shouldn't let the need to
pay taxes prevent you from making appropriate portfolio
management decisions (like selling stocks when they are way
overvalued or no longer of adequate quality).

You certainly shouldn't celebrate if you find that you can
offset realized gains with realized losses. That's a *bad*
thing, from an investment return point of view (you pay no
tax on the gains because, including the losses, you made no
money overall!). If you find yourself in that unfortunate
position you may as well take advantage of it tax-wise, but
being there isn't something you should wish for.

-Jim Thomas

To answers some of the questions.

Our group is moving money around. Some of our long term
investments (GLW - held for 5 years, SCRX) and our short
term (AAPL, MA, IBM) have done well and we want to lock in
our profits. We will be reinvesting the money, no one is
cashing out.

The reason I asked the question is we don' t have any
deductions year over year and I want to make sure that I
don't miss out on any. The first person responded
mentioned dues.. what did you mean by that. This club is
made up of 6 people (family) and we don't have any dues set
up now. What do you use them for?

I understand food doesn't qualify, but what about traveling
to get the group together. If the group wants to travel, is
there anyway to get the trip as an expense ? Travel to
check a compay out?? Just looking for ideas that other
groups may using to offset some of their captail gains.. if
there are any.







Jim Thomas wrote:
> I'm not exactly sure if your concern is about realized or
> unrealized gains. You should be celebrating if you have
> large unrealized gains.
>
>
> > The only thing you can do at
> > this point is offset those gains
> > with losses from the same time
> > period.
>
> If you anticipate having large realized gains in 2008, the
> question becomes what's the reason for selling stocks in
> 2008. As Lynn mentions, if it's to pay withdrawing members
> in cash there is a better way (transfer appreciated stock
> instead).
>
> However, if the selling is to move the money into better
> investment alternatives, paying taxes when you do that is
> part of investing. You certainly shouldn't let the need to
> pay taxes prevent you from making appropriate portfolio
> management decisions (like selling stocks when they are way
> overvalued or no longer of adequate quality).
>
> You certainly shouldn't celebrate if you find that you can
> offset realized gains with realized losses. That's a *bad*
> thing, from an investment return point of view (you pay no
> tax on the gains because, including the losses, you made no
> money overall!). If you find yourself in that unfortunate
> position you may as well take advantage of it tax-wise, but
> being there isn't something you should wish for.
>
> -Jim Thomas

Eric, I wouldn't sweat capital gains too much. When you report them at the
end of each year, your Paid In Plus Earnings/Tax Basis goes up, so that will
be less realized gain to pay taxes on when you eventually cash out. After
all, if you charge what amounts to personal expenses to the club, you are
taking away investment money, so what's the point? If you have legitimate
expenses you pay yourself that are part of your cost of investing, you can
claim that individually on your income tax, I believe. Gene Rooks, Space
Coast Chapter, Accounting Instructor

Eric,

The only offset to partnership capital gains would be
capital losses. Any expenses that you could possibly incur
would pass thru to each partner as a misc itemized
deductions ( if they have a Sch A). Then, the expenses would
be reduced by 2% of that individuals adjusted gross income.
It would be easier for each individual partner to offset the
gain within their own tax return, if it's possible to do so.

Debi

Eric Updike wrote:
> To answers some of the questions.
>
> Our group is moving money around. Some of our long term
> investments (GLW - held for 5 years, SCRX) and our short
> term (AAPL, MA, IBM) have done well and we want to lock in
> our profits. We will be reinvesting the money, no one is
> cashing out.
>
> The reason I asked the question is we don' t have any
> deductions year over year and I want to make sure that I
> don't miss out on any. The first person responded
> mentioned dues.. what did you mean by that. This club is
> made up of 6 people (family) and we don't have any dues set
> up now. What do you use them for?
>
> I understand food doesn't qualify, but what about traveling
> to get the group together. If the group wants to travel, is
> there anyway to get the trip as an expense ? Travel to
> check a compay out?? Just looking for ideas that other
> groups may using to offset some of their captail gains.. if
> there are any.
>
>
>
>
>
>
>
> Jim Thomas wrote:
> > I'm not exactly sure if your concern is about realized or
> > unrealized gains. You should be celebrating if you have
> > large unrealized gains.
> >
> >
> > > The only thing you can do at
> > > this point is offset those gains
> > > with losses from the same time
> > > period.
> >
> > If you anticipate having large realized gains in 2008, the
> > question becomes what's the reason for selling stocks in
> > 2008. As Lynn mentions, if it's to pay withdrawing members
> > in cash there is a better way (transfer appreciated stock
> > instead).
> >
> > However, if the selling is to move the money into better
> > investment alternatives, paying taxes when you do that is
> > part of investing. You certainly shouldn't let the need to
> > pay taxes prevent you from making appropriate portfolio
> > management decisions (like selling stocks when they are way
> > overvalued or no longer of adequate quality).
> >
> > You certainly shouldn't celebrate if you find that you can
> > offset realized gains with realized losses. That's a *bad*
> > thing, from an investment return point of view (you pay no
> > tax on the gains because, including the losses, you made no
> > money overall!). If you find yourself in that unfortunate
> > position you may as well take advantage of it tax-wise, but
> > being there isn't something you should wish for.
> >
> > -Jim Thomas