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Politics : Idea Of The Day -- Ignore unavailable to you. Want to Upgrade?

To: Riskmgmt who wrote (15890)	12/22/1997 12:45:00 PM
From: Logain Ablar	Read Replies (2) \| Respond to of 50167

Ray: 1. Are we through the tax selling for this year? I believe that individuals can sell up to December 31st and still take a loss for '97. Your right we can sell up to 12/31/97. I don't feel at this point individuals tax selling has a major impact on the market. Individuals should have been looking at this in November. Is it the same for institutions and if so, how do you see this playing out? Not the same, institutions have fiscal years that may be different than a calendar year (many, but not all, mutual funds have an October 31, year end, insurance companies have a December 31, year end but they would have made the bulk of their tax savings moves by now). For funds, managers performance is not (usually) tied to the after tax position of the gains. 2. Do you anticipate selling early in January for individuals and institutions defering profits till '98? Not at all. Institutions mark to market their portfolios every day, they'r e measured on realized and unrealized (not sold / closed) every day (institutions have to establish a "deferred" tax on their unrealized. Individuals may defer gains till 98 (and actually they may be holding to ensure the 18 month 20% capital gains treatment) but I'm not sure of the impact individuals have on the market. When does the 401K money get put into the market? Throughout the year investors will be having funds withheld from their earnings and this will be contributed through out the year. Business with profit sharing plans have until August 15 of the subsequent year to fund the plan and still take a deduction on their previous years tax return. However, for small business SEP IRA and individuals with IRA's (not covered under a 401 type plan) most of the deposits are in the February to April 15 time frame. My thinking on this is that, many investors have huge gains and probably have taxable gains for '97 and therefore will look to sell their losers by 12/31/97 and put off selling their winners till 01/01/98. To avail the 20% rate I'd agree investors will hold the gains (losses to the extent they exceed 3,000, net gains, has no tax advantage) until 1998. From a cash flow stand point selling on 1/1 probably wouldn't make sense. I'm assuming the investor (we are talking those with $$) would have to make estimated tax payments and the cash to the gov't is only put off 3 months not a full year. The interest on this tax decision shouldn't impact the investment decision. Hope this helps Tim