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CAPITAL GAIN AND LOSS MANAGEMENT

With the poor performance of the securities markets, unless you have been 100% in U. S. Treasuries or
Municipal Bonds, you have capital losses. The normal strategy is to take capital losses to the extent you have
realized gains. This minimizes the tax liability for the current year and minimizes capital loss carryovers.

However, there is a quirk in the tax code that applies to 2009 and 2010. Using a with and without calculation, if
your long-term capital gains fall in the 15% tax bracket, they are taxed at 0%. (That’s right, zero.) If you can
harvest long-term gains and have them fall in the 15% bracket, you can then preserve the future tax benefit of
the losses by realizing them in future years.