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Tom Meaglia, ChFC®

Chartered Financial Consultant

AEP®, CLU®, MSFS

Investment Advisor Representative

CA Insurance Lic. #0567507


Meaglia Financial Consulting

2105 Foothill Blvd., #B140, La Verne, CA 91750


Toll Free: 800-386-3700

Bus: 909-593-6105

Cell: 818-681-8600

Fax: 909-593-6120


Email: meaglia@earthlink.net

Website: www.meagliafinancialconsulting.com

November/December 2019

Harvest Time for Your Investments

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With the New Year just around the corner, many people will look at their investment portfolios for capital losses to deduct from their 2019 tax bill. But even when you own securities and mutual fund shares* that have experienced rough sledding the past 12 months, selling may not be the right response, despite the tax advantages.


The Basics
There are two types of investment gains or losses when it comes to federal taxes. You pay ordinary income tax for gains on investments owned for a year or less, just like your work income. Investments held for more than one year incur capital gains taxes when you sell them. For most taxpayers, this capital gains tax rate is lower than rates for ordinary income.


A capital gain or loss is the difference between your basis – what an asset or investment cost – and what you get for selling it. If realized capital losses are greater than your capital gains, you can deduct up to $3,000 a year, or up to $1,500 if married and filing a separate return. You may carry forward any losses over this annual cap to the next tax year. Using these losses as a deduction is sometimes called “tax harvesting.”


Considerations
Because gains or losses affect taxes only when “realized” after investments are sold, you will need to look at your entire investment approach. If you have a long-term investment strategy, selling an asset that has lost value during the past tax year isn’t necessarily a slam dunk, especially if it provides steady income, has strong long-term prospects and fits well into a diversified portfolio.


Likewise, you might sell an investment, even if it has gained in value, because it no longer fits into your long-term investing approach. Talk to a financial professional to learn more.


* Investors should consider the investment objectives, risks and charges and expenses of the fund carefully before investing. Contact the issuing firm to obtain a prospectus which should be read carefully before investing or sending money. Because mutual fund values fluctuate, redeemed shares may be worth more or less than their original value. Past performance won’t guarantee future results. An investment in mutual funds may result in the loss of principal.


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Investment advisory services offered through Fusion Capital Management, an SEC Registered Investment Advisor. 9111 Cypress Waters Blvd., Ste 140, Dallas, TX 75019.
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