Tax Implications and Responses for the Market Collapse

In spite of all the arguments to the contrary, recent activity in the financial markets has shown that markets are not always rational in the short run. Arguing about the rationality of the market will not solve the problems facing clients who have been hurt by the falling prices and volatility. The...

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Bibliographic Details
Published in:Journal of financial service professionals 2009-01, Vol.63 (1), p.69
Main Authors: Biggart, Timothy B, Harden, J William, Livingstone, Jane R
Format: Article
Language:English
Subjects:
Capital losses
Financial planning
Investment policy
Securities markets
Tax planning
Tax rates
Volatility
Online Access:Get full text
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Summary:In spite of all the arguments to the contrary, recent activity in the financial markets has shown that markets are not always rational in the short run. Arguing about the rationality of the market will not solve the problems facing clients who have been hurt by the falling prices and volatility. The focus of this article is to relate some tax tips to assist financial professionals in helping their clients deal with losses incurred in the recent market turmoil from declining values of both investment portfolios and real estate. The article will also discuss some attempts by the government to improve the situation in the financial markets. The idea of dollar-cost averaging is still valid. In the current political environment, clients with potential capital losses may also want to consider the effects of future tax rate changes on the relative benefit of current recognition of those losses versus deferring the recognition to a future period.
ISSN:1537-1816
2381-8875