Capital Gains
With the turmoil in the financial markets, many investors have incurred large, unrealized losses in their investment portfolios and significant declines in the value of their real estate holdings. Accordingly, careful year-end tax planning is necessary to take maximum advantage of these losses. In addition, the decrease in asset values may present unique gift and estate planning opportunities. Generally, the sale or exchange of a stock or bond by an individual investor to an unrelated party for an amount less than the purchase price of such security gives rise to a capital loss. Such losses are deductible in the year of the sale or exchange but only to the extent of capital gains recognized in the taxable year of sale, plus $3,000 ($1,500 for married individuals filing separately). Capital losses in excess of this limitation may not be carried back to prior taxable years but may be carried forward for an unlimited number of taxable years until fully utilized.
