FRANKLIN TELECOM (FTEL) Message Board

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Microcap & Penny Stocks : FRANKLIN TELECOM (FTEL)

FTEL 0.732

-10.6%

Nov 19 3:55 PM EST

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To: Pat Garaffa who wrote (38190)	9/30/1998 11:06:00 PM
From: George Papadopoulos	Read Replies (3) of 41046

OT:Wash sale rules You said: >If you haven't made your 1998 contribution to your tax deferred retirement account you can get a double benefit. Sell the security out of your taxable account and take the loss. Then buy it back right away for your tax-deferred account and take the deduction on your 1998 taxes. That's my favorite!> The scenario you have described is one that has still not been challenged and legislated in the courts. Wearing my CPA hat, this is a very aggressive move. Nothing wrong with that but I rather not have my clients become tax law test cases UNLESS they understand the consequences (lawyer fees, endless waste of valuable time going through the legal system ,etc.). If a potential client was an audit "red flag" client REGARDLESS of the scenario outlined above you bet I would advise NOT to do this. You also said: >That scenario works best with mutual funds. You can sell off a looser and buy back an identical fund by another company and still use the wash rule to your advantage. Example: Sell Fidelity Small Cap Value fund for a loss and buy back a Janus Small Cap Value fund in the same account. Two different funds but they are both investing in the same style. If you want to stay invested in that style fund, but wish to offset another gain, this is the way to do it. Same holds true for an index fund. Example: The market tanks and you want to offset a gain. Dump your Vanguard Index 500 and buy back the Schwab Index 500. Take the loss and your still invested in the same index, only through another company. Again a gray area of the law. It is still gray because there has not been a court case yet. The Code only refers to "substantially identical" securities. Stocks is fine. Different small caps is definitely gray and index funds you can pretty much forget in in case of an audit (assuming the auditor is smart enough and knows what he/she is doing). >The IRS thinks they're smart, but all they're good at is confusing people and forcing accountants to go gray and get ulcers. IRS does not make these confusing laws, Congress does. IRS tries to do its best trying to administer these laws. I quit public accounting because I was going gray and those ulcers<gggg>.

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