Consumer Reports MONEY ADVISER
P.O. Box 5618, Harlan, IA 51593. Monthly, 1 year, $24.
Watch for checking account fraud
Marlys Harris: "Checking account fraud is on the rise, says a survey by Gartner Inc., a Stamford, Conn., market-research company. Last May the Federal Trade Commission filed suit against scammers who tried to drain more than $10 million from 90,000 bank accounts. The thieves somehow obtained checking account numbers, then set up a bogus pharmaceutical company Web site. The company presented demand drafts (similar to checks but without the consumer's signature) to banks using the illicitly obtained account numbers supposedly provided by phone. To lower the risk that your account will be hijacked, don't check your account balances on public computers, and don't reveal your account number to anyone who calls you or contacts you via e-mail. Also, review your monthly statements to check for unauthorized charges or withdrawals. If you spot one, ask your bank to investigate it."
THE MONEYPAPER
555 Theodore Fremd Ave., Ste. B-103, Rye, NY 10580.
Monthly, 1 year, $99.
Vita Nelson: "Now is the time to analyze your trading results so far in 2004. If you wind up the year with net capital gains, you'll owe tax next April 15. But year-end maneuvering can transform that obligation into tax savings.
Suppose you discover that you have realized $30,000 of long-term capital gains during 2004. If you do nothing, you'll likely owe $4,500 in federal income tax, at a 15% long-term capital gains rate.
Rather than accept this situation, go through your portfolio in search of losers and sell enough stocks, bonds and mutual funds to realize $33,000 worth of losses. This will give you a $3,000 net loss, which is fully deductible from you other income. In a 35% effective tax bracket, that means that instead of paying $4,500 in capital gains, you can save $1,050 (35% of $3,000) of taxes on your other income.
Under the tax code, a $3,000 net capital loss is the largest amount you can deduct in any year. Net losses in excess of $3,000 may be carried forward to future years.
If you think that your losers still have potential, you can sell, but preserve your position in them by any of the following means:
• Wait at least 31 days and buy them back. If you act sooner, the tax loss won't be allowed under the wash-sale rules.
• Immediately buy back securities that are similar but not identical. If you've taken a loss on a 20-year municipal bond, for example, you can immediately buy a 20-year municipal bond from another issuer without losing your tax deduction.
• "Double up." Say you'd like to sell 500 shares of ABC Company, at a loss. However, you think ABC might bounce back immediately and you don't want to be out of the market, even for 31 days. In this case, you could buy another 500 shares of ABC. After waiting 31 days, you can sell your original lot. This maneuver permits you to take the tax loss on the original lot while retaining the second lot - and your position in ABC. As you can see, the 31-day wait requires you to begin a double-up plan in November, if you want to take a tax loss for 2004."
THE KIPLINGER LETTER
1729 H St NW, Washington, DC 20006.
1 year, 52 issues, $84.
How to trim auto coverage costs
Knight Kiplinger: "Technology offers a way to trim bills for automobile coverage: A sensor that records how far, how fast and when you travel. Drivers who travel shorter distances, go slower and avoid rush hours get discounts. Progressive Insurers Group is testing such a device. Other insurers will follow. In a related program, subscribers to Onstar, an auto communications system, get a 20% break from GMAC Insurance. The General Motors subsidiary figures OnStar cuts the risk of accidents.
Use of such a device will be voluntary to protect privacy."
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