A.I.M. Users Bulletin Board

[SFSecurity]

Hi Bowler Bob and Gang, Yes, that is correct, short term capital gains on "exotic" ETFs. See http://www.dailyfinance.com/2010/02/09/exotic-etfs-may-hide-an-unpleasant-tax-surprise/ for a decent explanation.

Alas, we do have to think about the total taxes, state and federal, when we select investments and the way we work them. This is made a bit easier, if my understanding is correct, because both short term and long term losses can be used to offset both short and long term gains. An additional $3000 of prior year losses can be used as well. This makes it a bit less painful to accept a bad choice of a position in our portfolio and having to sell it at a loss to right our investment ship.

But do not get too big a loss reserve as it dies with you and is not available to your beneficiaries. I found this out the hard way when my mother died last year.

Warmest Regards,

Allen