A friend sold property worth $300,000 and elected to take annual payments of possible? Also, is it wise to dispose of shares at a loss to offset gains for a similar amount? I feel I was taken for a fast ride by a broker and lawyer and should never have disposed of shares that were bringing in good dividends. W. T.
Selling property with a payout in installments reduces the total tax bill by spreading the capital gain over several years -- five in the case of your friend. Whether $40,000 tax is possible or not depends on your friend's other income, but the percentage you cite is possible.
Selling shares at a loss to offset a gain may be prudent tax strategy for some. But there is little point in selling shares if they are providing good income unless there is an alternative that will produce the same or greater income. Attempting to decide investment strategy without knowing all the details and balancing the pros and cons is not possible. Investors who depend on others for advice rather than understanding the alternatives have no choice but to do as their advisers recommend. Personally, I believe investors should understand the markets and their own position enough to make their own decisions or evaluate alterna tives for the best course of action.