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Technology Stocks : Intel Corporation (INTC)

INTC 35.94

-5.1%

3:59 PM EST

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To: Mo Chips who wrote (48503)	2/22/1998 11:44:00 PM
From: Paul Engel	Read Replies (2) of 186894

Mo - Re: " If you would never sell, then how do you expect to extract the rewards of your risk taken?" Selling Intel (or any other capital asset) will result in an immediate taxable event. Adding up state and federal taxes, and the dreaded AMT tax (Killer of all Killers) the net profits on such a sale are diminished by 28% to 40%. In the extreme case, nearly half of my profits would be given away after I bore 100% of the risks. Not a good trade-off. Holding the assets - Intel in this case - allows me to receive 100% of the gain in Intel stock totally tax free - Carl Mehr has also described this economic reality in quite eloquent terms. In this manner - I still assume the risk, but I keep 100% of the increase in my "paper assets" . The risk of Intel going down - in my case - requires nearly a 40% drop in Intel share price before it becomes a wash with a sale of the stock at its higher price. Case in point - Intel hit a high of $102 last August. Had I sold, the 40% tax bite I would have LOST allowed me to instead hold my stock and watch it dwindle by 34% to about $67 - briefly. Thus, I was still ahead by 6% (40 - 34) despite the drop in Intel, yet I held on to ALL MY INTEL SHARES to FULLY PARTICIPATE IN INTEL's resurrection to $91 3/4 - current valuation. Re: "how do you expect to extract the rewards of your risk taken?" Like a rich person - you call up the bank and they send you money - other people's money - and I get to spend it for a mere few per centage points of interest. That interest payment then becomes MY TAX DEDUCTION to offset other income! So, I keep what I own - it rises in value and other people's money is at my disposal for the pleasure of spending. Wealth preservation, Mo. It's so simple, Mo, that even you may understand it. Paul

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