It is still not too late to take advantage of tax loss selling in your accounts. This is simply selling an asset that now has a value of less than your cost. You will be allowed a loss for income tax purposes. There are a few simple details depending on your circumstances so you can check with your CPA or follow the link below to Investopedia for a lot of good explanation on the topic.
The security cannot be purchased again for 30 days according to IRS rules. If you are afraid the market has bottomed and you will miss out on the first big leg up don’t fret. You can sell the assets you choose for tax losses and then purchase very similar assets the same day. For example if you own Merck at a loss you could sell it and buy Pfizer. If you own several drug companies you can sell them and buy a pharmaceutical ETF or Exchange Traded Fund such as SPDR S&P Pharmaceuticals symbol XPH. Similarly you could own a large cap stock mutual fund at Fidelity sell it and replace it with a large cap mutual fund at Vanguard or an index mutual fund.
If no one is doing this in your accounts after the year that we have had there is a good chance you are leaving money on the table. The selling must be done by year end to be appied to your 2008 tax return. Take action today as I know you do not want to figure this out on New Year’s Eve!
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