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Wednesday, October 22

The Herald and The Lantern

Page 31

Money Matters

Bt SUM TO SA r, "I SAW your ad in thi

Tax-Swapping

by Vince FalglniU In addition to using the tax-free interest advantage of municipal bonds, the complete investor will learn that there are added tax advantages to be derived through swapping various types of securities. The principal advantages which you might derive are: • Offsetting capital gains taken in 1900 by taking capital losses in your portfolio. • Offsetting up to $3,000 of other income received in 1980 by using excess capital losses realized through tax swaps. • Wherever possible, upgrading the quality of your portfolio while achieving the tax benefits desired. THE LOSSES realized by such sales can be used to offset capital gains which you have realized or will realize in 1980. Any realized loss in excess of capital gains taken during the year can be used to offset other income up to a maximum of $3,000 as described below, and any balance of losses may be carried forward to future years. In computing the $3,000 capital loss deduction, net short term losses — after offsetting capital gains — can be used on a dollar for dollar basis. However, only 50 percent of net long term losses can be so used. Short tenti losses are always used first in computing the capital loss deduction. I ALMOST ANY type of security may be used in order to accomplish a tax swap. For example, municipal bonds are especially well suited for tax swapping, since you may deduct a loss on the sale of a municipal Rummage Sale October 24 & 25 STONE HARBOR - There will be a rummage sale benefiting St. Mary’s Episcopal Church at the 95th and TTiiW Ave: parish hall this Friday and Satuday; 6:30 p.m. to 8 p m Oct. 24 and 9:30 to noon Oct. 25.

bond even though you immediately repurchase a similar bond by the same issuer, as long as the bonds are not "substantially identical." The IRS ruled, fgr example, that RichmondPetersburg Turnpike 4.5 percent revenue bonds were not “substantially identical” to the same issuer’s 3.4% bonds even though both were issued on July 1, 1955, and both mature on July 1,1955. HERE'S AN example of a municipal bond swap: Ml: *25,000 Jane* City General Revenue Bondi 4 4% due 1/I/M at MOO per bond. Rated Aaa. (Original Coat *25.000 .. Proceed* front Sale MO,000... Tax Loaa *8,000.1 Bay: *25.000 Jonea City General Bondi 4.5% due 1/I/M at *710 p*r bond. Rated Aaa. (Coat of Purchase *17,750.) Rom It* of Swap: Quality la maintained. Annual Income li maintained. Face Value la maintained, Maturity Is extended nine yean — Caab Generated for Reinvestment *2.250. Tax Loaa Created. 15,000. MUNICIPAL BOND Funds and Corporate Bond Funds are also excellent vehicles for accomplishing tax swaps. It is permissible to sell units in one series of such a fund and immediately purchase units in another series of the same fund, since the IRS considers the portfolios of the various series as not being substantially identical (different bond issues, different coupons, etc.). In this matter, monthly income payments can remain approximately equal and uninterrupted. REGARDLESS OF the type of swap being contemplated, two important factors must be kept in mind: First, the tax benefit which will be derived must be sufficient to offset any commission expense which may be incurred in effecting the swap. Second, the swap shouldn't run counter to your basic investment objectives. Only in the most extreme circumstances should longterm goals be sacrificed for the sake of a temporary tax benefit. Vince Fulginiti. a Wildwood resident, is an account executive with a leading Investmentbroker.

Couple Die In Scotland

AVALON - Edward G. Wright II and his wife Elizabeth were killed in an automobile collision while Vacationing in Scotland, Oct. 13. A contractor here pince 1968, Mr. Wright was an officer in the Chamber of Commerce and on the Avalon Planning Board. He was personnel manager of Boeing Vertoi. Mr. Wright attended Episcopal Academy, Philadelphia, and was a graduate of St. Andrews School, Georgetown, Md. and the University of Virginia. - Mrs. Wright came to the United States as a bride in 1958. She is survived by several brothers and sisters in Scotland. Mr. and Mrs. Wright are survived by sons Edward III of Philadelphia, Stewart and Sanderson of Avalon. Mr. Wright is also survived by his mother, Mrs. Geneva Adams of Oxford, Pa., and a sister, Mrs. Thomas R. Latta of Newtown Square, Pa.

There will be an Ecumenical Memorial Service. 8 p.m. Oct. 24 in Maris Stella Church, Avalon.

RMOOA ANN FADDM. M. of • E. Delaware Partway. Villa*, Oct. 15. She waa the retired owner of the Villa* Veteran* Taxi Service GRACE M. BURREIX HIGH. M, of Diaa Croat, Oct. II. She waa a member of the American AaaociaUoa of Retired Paraona LEONA E. JEFFS. M. of 5 Beach Dr.. Town Bank, Oct. 12. She waa a member of the Tabernacle United MethodM Church of Erma. HF.NRV R. MANSHtA, *4. of 2IZ7 Bayahore Rd . Ftahinc Creek. Oct 11. Ho waa a IlfelM ana reaident NANCY J. LOCKE, *7. of 418 Proapect St.. Hat Spring*. Art., formarty of Wildwood Croat. Oct. 12. In a fire at her home IDA REVKRZ. 42, of Sixth St and Wildwood Blvd , Rio Grande. Oct. II in an automobile accident. Hamilton e lived her* lor 20

EDWARD G. WRIGHT II. of M W 2Rh St. Avalon. Oct. 12. in an automobile accident in Scotland. El JZARETH K. WRIGHT of M W tath SI. Avalon. Oct. II. In an automobile accident in Scotland

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