Now that the elections are over and the end of the year is near, we have to some year-end tax planning. Conventional wisdom says that income taxes will rise; the question is whether it will happen in 2009 or 2010. Since we cannot tell at this point, we have to plan based on what we know.

Under current law, if you sell stock at a gain and you are in the 15% bracket, you will pay zero tax on that gain. If you are in a higher bracket, you will have to pay a maximum of 15% capital gain. This law is in effect for 2008 and 2009. Since we do not know if the law will change, the time to sell is now.

If you are in a higher tax bracket, you might consider gifting appreciate stock to your children, who can then sell the stock and pay zero tax. You might also gift the stock to an adult child who has very little income; for example, a college student who just graduated or a family member who is deployed or even a retired parent whom you are helping to support. Gift that stock to the parent and then let them sell the stock and not need to pay the gain.

 
This information is provided in an effort to help you gather and organize the information necessary to file your individual or small business income tax return. While these financial tools are not a substitute for financial advice from a qualified professional, they can be used as a starting point in your decision making process.