Newspaper article THE JOURNAL RECORD

Tax Laws Allow Investors to Recover Some of Stock Losses / Says Robert Braver

Newspaper article THE JOURNAL RECORD

Tax Laws Allow Investors to Recover Some of Stock Losses / Says Robert Braver

Article excerpt

Investors can recover some of their stock market losses and save taxes by taking advantage of new tax laws, according to Robert E. Braver, resident manager of the Oklahoma City office of Rauscher Pierce Refsnes Inc. brokerage firm.

Marginal tax rates in 1988 will be lower than in 1987, making 1987 deductions more valuable, Braver said.

"Consequently, the most basic tax strategy is to take deductions this year and defer income to 1988," he said. "Think of it as a three-step process."

- The first step is selling enough securities, which have lost money, to offset capital gains. "This will reduce your 1987 capital gains tax," he said.

- Second, sell to reduce taxes in your highest tax bracket.

"Capital losses that exceed capital gains by $3,000 or less are deductible, dollar-for-dollar, from ordinary income," Braver said. "Short and long-term losses above that level can be carried over to subsequent years."

Investors must wait at least 31 days to re-purchase the same stock on which they took a loss, or the loss will be disallowed by Internal Revenue Service wash sale rules.

- In the third step, the investor with capital gains can lock in the gain this year, but postpone the tax to 1988 by selling short the same number of shares currently owned. The amount of the gain is fixed on the date of the short sale, but the gain is not reported until the shares are delivered in 1988 to cover the short sale.

"Remember, however, that this is the last year there will be a distinction between long-term and short-term capital gains or losses," Braver said.

Because every investor's situation is unique, Braver recommends that investors consult with investment and tax advisors in planning a year-end strategy. …

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