Also keep in mind that for some club member the long-term capital gain tax
rate may be zero. No tax benefit comes from realizing a capital loss to
offset a tax-free capital gain. (Yes, in the example given both the loss
and the gain were short-term.)

-Jim Thomas

Thanks Jim. Of course you bring up good points. The intent of my
post was not to give an all encompassing discourse on tax planning. I
hope nobody took it as such.

:)

I was just trying to bring up a thought process that I thought might
potentially have benefit not only tax wise but also in helping with
the ever difficult situation we all have of deciding when to sell.

In the situation I described (which actually applied in two different
club meetings I had last week), there were portfolio projected return
reasons to seriously consider selling both stocks. For the stock
which had run up more quickly than expected, the projected return was
now fairly low. For the stock whose price had dropped unexpectedly,
while the projected return still looked pretty good for the long term,
 there was probably a good case to be made that a recovery might take
some time.

Despite this, both were good stocks that my clubs were having trouble
letting go of for projected return reasons alone. I'm sure others of
you have been up against this in your clubs. The tax situation gives
an additional reason to consider a near term sale for both stocks.
As I described, if you really missed them after they'd been sold, you
didn't have to wait long before you'd be able to purchase them back
with no adverse and perhaps even beneficial consequences.

I think sometimes we forget that every day we keep a stock, it is as
if we are deciding to purchase it on that date. But, we might think
differently about whether we really wanted to own it if we actually
did have to make a conscious decision to purchase it.

I think, at a minimum, it's a useful thought process to go through.
As I mentioned, if you have specific questions on the ultimate tax
consequences for your club and your members, feel free to bring them
up.

--
Laurie Frederiksen
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