Introduction

A Holiday Message from Phil Multop ...

"This is the time when we reflect on our successes of the past year and feel gratitude in our hearts for the many blessings we have received. As we spend time with family and friends, we are reminded once again that nothing is as important as showing love, charity and goodwill toward all men. As we close the chapter on 2009, we extend our heartfelt wishes that your holiday season be filled with peace and joy. From all of us at Multop Financial, Merry Christmas."

Financial Tip – Tax-Loss Harvesting

Let’s first caveat this section by saying, “Don’t let the tax tail wag the investment dog,” investments decisions should not be made solely for tax considerations. The idea behind tax-loss harvesting is to use your capital losses to negate your capital gains on a dollar-for-dollar basis.

Paper losses do not count so you actually have to sell the asset and “realize” the losses. Short-term losses are deducted against short-term gains, which are taxed at higher ordinary income tax rates, while long-term losses are deducted against long-term gains at the lower capital gains rate.

Keep in mind that you can deduct as much as $3,000 a year of your net losses from your ordinary income and that excess amounts are carried over into future years. This might seem especially appealing considering the looming threat of higher capital gains taxes in the upcoming years means it might be wise to realize those losses now.

If you plan on reinvesting the proceeds be aware of the wash sale rule, violation of the rule results in the IRS’s denial of the deduction. The IRS states a wash sale occurs when you sell or trade a security at a loss and buy the same stock, or something “substantially identical,” within 30 days of the sale (before or after the sale). (See IRS Publication 17 and 550)

Tax Tip – Benefits of Donating Appreciated Assets to Charity

Many of us donate to charity not just to contribute to a worthy cause but also to lessen our tax burden. You might consider a better way to fund your favorite charity. If you itemize your deductions, you may want to consider donating appreciated assets (stocks, bonds, mutual funds, etc) that you have owned for more than a year. By donating an appreciated asset to charity, you benefit because you receive a tax deduction of the appreciated fair market value, not the basis of the asset, and avoid paying capital gains tax. The charity incurs no capital-gains tax on the sale of the appreciated asset.

In terms of assets that have lost value, the best tax strategy would be to sell the asset then donate the money to charity. Otherwise, you will not be able to claim the capital loss and you will only be able to deduct the fair market value of the asset even if it is less than the basis. Keep in mind this donation must be made before the end of the year and transfer of ownership may take time.

About Multop Financial

Multop Financial is comprised of Financial Advisors, Tax Specialists and CPA's working together to provide financial management over a client’s lifetime.  We employ a team approach to ensure the continuity of your planning.  What can we do for you today?

Multop Financial
333 Calluna Ct
Suite 205
Bellingham, WA 98226

Phone: (877) 671-7980
Fax: (360) 671-4963
Email: info@multop.com

* Please note that individuals who are selected by Goldline Research as Wealth Management Leading Providers do not pay a fee to be included in the research or the final list of wealth managers, however, there is a fee associated with the use of the Goldline Research logo and other marketing materials. Wealth Managers who are included on the Goldline Research Wealth Manager list must meet the following criteria:

• Fee Only, Fee Based or RIA
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• Advanced Certifications Held
• Comprehensive Range of Wealth Management & Financial Planning Services Offered
• 20+ Years of Industry Experience