As we have in previous years, the time has come to review Unrealized Gains and Losses reports for all clients that have accounts subject to tax. Given the unusual year we have had in the markets, we have decided to begin this process a bit earlier this year. We plan to run these reports over the coming weeks and are likely to find some positions to sell in order to capture losses and save some money in taxes. With the significant downturn so far this year, you could have the opportunity to soften the blow somewhat by reducing your tax bill this year and possibly in future years, as well. We call this "harvesting tax losses."
If we do sell such an asset, we will reinvest the proceeds into a "substantially different" mutual fund so we avoid the "wash sale" rules but remain in the market. At tax time we will provide details of the sale, including the cost basis to you. This report would be sent to you early in 2009 for submission to your accountant. If in your case, we do find sufficient losses to justify harvesting you will receive confirmations of the trade activity from Schwab.
But before we are able to proceed with loss harvesting, we will need your authorization. Please contact our office with your authorization.
