There has been a lot of talk regarding new government programs aimed at lifting the country out of the ongoing recession, but little attention has been paid to existing tax laws. Here are three areas where you may be able to claim tax deductions for losses incurred during this tax year.

If you are currently holding assets such as stocks and bonds and have unrealized losses (meaning that you paid more for them than what they are currently worth) you could sell these investments and deduct $3,000 of losses against your taxable income every tax year.

If you are a small business owner and sell your stock for less than your initial investment (or if your stock is now worthless) you can deduct up to $50,000 ($100,000 married filing jointly) of losses from the sale of the small business stock against your taxable income during a given tax year.  The rules for this deduction can be complicated so please check with us for further details if you are in this situation.

An additional tax benefit can be gained from the sale of assets used in a business. This includes most business property except for inventory.  A loss on the sale of business property may offset ordinary taxable income for an individual taxpayer.  However, a gain will be taxed at the reduced capital gains tax rate.

Of course, the tax implications on a sale of an asset are only a small part of your decision on whether to dispose of an investment.  The economic outlook, investment itself and your personal financial situation are critical.  If you have any questions as to whether any of these tax laws may benefit you, feel free to contact Cover & Rossiter to assist you in your tax planning.

For more information, please contact:

Loretta Manning

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