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  • Writer's pictureJulie Skye

This 1st Week of December 2022 Thoughts

Fed Fund Watch: the 10-Year Note was 3.89% last week and is now 3.74% I continue working on portfolios for tax loss selling to help your 2021 taxes.

RMD Countdown we can still take charitable contributions from your IRA.

Take our Risk Assessment! “When you see a statistically-significant study showing a 100% probability that the market will be up in a year or that 2023 will be an up year, keep in mind that almost all of them lack a key metric: the maximum draw-down along the way. So you shouldn't assume from those studies that the market will go up starting on Day 1 or that the path to the end point will be a straight-line one.”

Why it matters: Ok, Ok…below are some quotes from “notable pundits:” some are just fun truisms, but a couple are things are things we can control…so it makes sense to focus on them. Which ones do we focus on? 1. "Stocks don't sprint, they dance" – Unknown 2. “Seeing "statistically significant" and "100% probability" in regards to the stock market should make everyone cringe.” 3. “Almost no one currently working in finance, economics, markets, or policy- making has any real-world experience dealing with real inflation.”

4. “A new academic analysis challenges the conventional wisdom advocated by many CPAs to defer taxes for as long as possible.”

5. Tax efficiency can deliver up to several years of additional portfolio longevity while improving estate plan efficiency.”

Why is everyone all a twitter about Twitter? I follow some pretty interesting characters, financial writers and industry leaders who I think are the smartest folks in the room about their area of expertise. Below are some of the “tweets” from my favortie, Helene Meisler, following a “Tweet” about the post on the first page, above. Here are some of the comments by some of her followers, on

Why does it matter to you? These last three years have proven that, more than ever, knowing who to listen to is one of the most important decisions we can make. A huge part of my day is devoted to reading, following smart leaders, and applying that information to how I bring the best advice to you. I am very sad at the noise and bad energy coming from Twitter, as how else could I get to “talk” with Alec Baldwin, Bette Midler, Steven Spielberg and other cool folks, than on Twitter? Today, I am trying to decide if Elon Musk is someone I even want in my circle. If Twitter was gone, what would replace the hole that it would leave?

Why do I spend so much time talking about tax-loss selling? My goal is to help you reduce your taxes each year by offsetting capital gains. Here is a great article, and an example for how valuable this is: Cutting Taxes Matters

A capital asset is anything you purchase and own for personal or investment purposes…real estate, stocks, bonds, or mutual funds. You will have a capital gain or a capital loss if you sell that asset for more or less than your basis in it—what you paid for the asset, plus certain allowable costs. The difference between what you paid for the asset and the sale price represents either a capital gain or a capital loss.

Lets' look at an example: you would have a $5,000 capital loss if you purchased an asset for $50,000, invested $10,000 into maintaining it, then sold it for $55,000. If you sold it for $70,000, you would have a $10,000 capital gain.

Suppose that you have a $5,000 capital loss, and you also have a $5,000 capital gain on the sale of another investment. The gain and the loss would offset each other on your return. In that situation, you would have no tax loss remaining to carry over to the next year.

You cannot choose to pay tax on the gain this year and roll over the loss to the following year; capital losses must first be used to offset any capital gains of the same type in the current tax year before they can be rolled over to the next.

But, more than the gains or losses thing, you can off-set your ordinary income…what you have earned from a job, or your investments. You can deduct losses of up to $3,000 from your income each year, if your capital losses exceed your capital gains. For example, if you made $50,000, have a $5,000 loss and no gains, you would still only be able to deduct $3,000—bringing your taxable income to $47,000. The remaining $2,000 of your total $5,000 loss can be carried forward to future years.

So, if you do not use it today, do you lose it? Here is an example of carrying over losses you may have. Suppose the stock market has a bad year. You sell a stock or mutual fund and realize a $20,000 loss, but you do not have any capital gains that year. In that year, first, you will use $3,000 of the loss to offset your ordinary income. The remaining $17,000 will carry over to the following year.

Next year, if you have $5,000 of capital gains, you can use $5,000 of your remaining $17,000 loss carryover to offset it. You can use another $3,000 to deduct against ordinary income, which would leave you with $9,000.

The remaining $9,000 will then carry forward to the next tax year. If you had no capital gains in the following three years, you could use up the remaining $9,000 loss, $3,000 at a time, over those three years. Why does it matter to you? One of the reasons I ask for your tax return each year, is so I can see if you would benefit from selling gains, OR losses, in your taxable accounts. As mutual fund capital gains are usually paid in December, I often must wait for the last few weeks to get the final tally. It is a busy time for me, and one reason I never take off the last two or three weeks of the year. Required Disclosures: Always read the fine print! This content reflects the opinions of Julie Skye and is subject to change without notice. This content is for informational and entertainment purposes, and it is not a recommendation regarding the purchase or sale of any security. There is no guarantee that any statements, opinions, or forecasts provided herein will prove to be correct. Past performance may not be indicative of future results. Securities investing involves risk, including the potential for loss of principal. There is no assurance any investment plan or strategy will be successful.

Registration with the SEC does not imply a certain level of skill or training. Find our ADV Part 3 for more about the firm here: ADV Part 3 Client Relationship Summary

Julie is an Investment Advisor Representative of Sustainable Advisors Alliance, LLC (SAA, LLC): Advisory services are provided by SAA, LLC.

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