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Tax Tip of the Week
For the week of
December 08, 2003

Take time to review your investment portfolio

As year-end approaches, it's a good time to review your investment portfolio. With the market recovering from its earlier lows, you may have some winners to offset the losers among your stocks and mutual funds.

Only you can decide whether you want to hold or sell a particular investment, but if you decide to sell, here are some year-end reminders:

  Don't forget to adjust your cost basis for reinvested dividends. Each time dividends from a stock or mutual fund are automatically reinvested, they add to your cost basis. This matters because your capital gain or loss is the difference between your sales price and your cost basis. If you forget to include these reinvested dividends, you'll pay more taxes on your gain or have a smaller capital loss.
  Ideally you should keep a running total of the reinvested dividends as they're paid. If you haven't done this, at least save all the statements so that the adjustment can be made when you sell.
  Don't forget that selling some of your losing stocks can offset capital gains from the winners. And if you have more losses than gains, you can use the excess to offset up to $3,000 of ordinary income.
  Remember that for 2003 there will be two sets of rates for long-term capital gains. Transactions before May 6 fall under the old higher rates, generally 20% or 10% for stocks and bonds. Transactions occurring on or after May 6 will enjoy the new lower rates of 15% or 5%, depending on your tax bracket.

For assistance with the tax issues in your investment review, contact us.

Click here to view previous tax tips.

"Tax Tips" are published weekly to provide useful tax information. Return to this site every week for helpful tax-cutting suggestions, tax reminders, and current tax information.

The information contained in this site is of a general nature and should not be acted upon in your specific situation without further details and/or professional assistance.

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