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To: Alberta's Child

I wonder how many people know this.


6 posted on 09/22/2010 9:38:51 AM PDT by CPT Clay (Pick up your weapon and follow me.)
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To: CPT Clay
That point was hammered home to me when I was driving somewhere a few years ago and listening to a personal finance show on the radio.

A listener called in asking about tax implications of some financial transactions he was considering, and when the host asked him some questions about his recent activity the caller gave the following answer (I paraphrase, of course):

"I was looking for better diversification and saw an opportunity to do this in a way that gave me some tax advantages, so sold all the shares in my S&P 500 index fund and immediately invested that money in a Wilshire 5000 index fund. I was able to report a 'loss' on my S&P 500 redemption because I had bought those shares during the stock market boom of the late 1990s."

The host of the show got all kinds of excited about that one . . .

"You go to the head of the class, my friend! That is one of the smartest moves a caller to this show has ever made. Since the S&P 500 companies make up almost 60% of the Wilshire 5000 index, you still own shares in those companies anyway -- and yet your transactions qualify as a 'paper loss' for tax purposes!"

8 posted on 09/22/2010 9:48:11 AM PDT by Alberta's Child ("Let the Eastern bastards freeze in the dark.")
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