Year End Tax Planning.

CAPITAL GAINS AND LOSSES

Do not overlook losses in the stock market. You should use these permanent losses to offset capital gains, including mutual fund distributions. Call your fund to determine these unforeseen distributions before year-end. If there are no gains offsetting these losses, the write-off is limited to $3,000 per year against ordinary income. Any remaining losses are carried forward to future years. Avoid wash-sale rules barring the buyback of securities purchased within 30 days before/after a stock are sold. But WAITING 31 days is OK and will not cause disallowance of a loss!

FAMILY GIFTS

When estate planning is a concern, consider transferring up to $12,000 to each of any number of individuals you choose, free from any gift tax to any individual you choose; up to $24,000 if from a spouse as well to the same individual. Make the gift before year end and in time for the receiver to cash the check, draft or money order before the close of business 12-31 -08. And make another gift at the beginning of the year if transfers are in an expediency mode for estate planning.

TAXES-STATE AND LOCAL

It is generally TAX SMART (within limitations) to prepay all state and local taxes that are known before the current year ends to receive the CURRENT YEAR itemized tax deduction.