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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 capital 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 2008 and 2009 only. 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.