Wondering!!?

My wife just got back from a vacation in Mexico.. two days ago , She is already at it. At the supper table last night she
is into her obbession..allready. she informs me that a life
insurance policy that I have , I will be specific for clarification purposes for 3 mil with PRU that went public in Jan 04
issued me 12,400 ?some odd shares at 35.00 or 28.00
can`t remenber exactly now but anyhow that has risen to
almost 17,000 shares today at 101.00 it is projected short
term 125.00. she wants to sell before dems raise the 15%
capital gains tax in 08 . I suggested keeping it long term
by creating a trust fund in kids name , and moving some
major real estate holdings at a drastic loss into that fund
to create capital gains loss to offset the gains when sold..She is insisting that would not be legal. Wondering .. Any IRs gurus here..

Sir .It is possible I mistated my question
I am not moving it in the same fund that would not make sense .First My wife tells me that all tax brackets in capital gains are taxed at 15% correct ?
I am presently in an evevated tax bracket
in the tens of thousands monthybut less
than one mill.annual .sennario Dems take
over in 08 They will increase it to 35%
flat. My suggestion was a separate
trust enity in 3 names where I would
sell into it valuable real estate at noninal prices to have a capital loss for to offset
tax gain OK explanation say 500.000
real estate sold to trust for 10,000 do
I
have a capital loss of 490,000?
this is where
I am coming from Issue will be resolved
by 08 . but I want rebuttal points on this
matter prefferably Pro Me.Its a gender thing My mind and efforts are elsewhere..
Thank You Very Much Greatly Appreciated..

Moving funds around with in a given fund will have no tax consequences due to those moves. Intentionally creating a loss to avoid tax is not illegal, just not very bright. If you pay tax at the 15% rate or the 30% rate you still have the remainder (85 or 70 %) to use as you see fit. If you create a loss you you have 0% as a remainder.

Sell sell sell... to me Report It

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Wow, for a guy who makes a $million or so per year, you sure are hard to understand!!

First, the 15% LT cap gains rate is already going away on 12/31/08 regardless of which party is in power. It will revert to the 20% rate, not 35%. I wish I had your crystal ball as to who will do what in the future.

Also, I have no clue what you mean by "keeping it long term." if it's already LT, it stays LT till sold. Long term means that you have owned it for more than 1 year.

Now, moving anything into a trust, whether prop. that now appears to have a gain or loss will do nothing to reduce tax. This is so because the cost basis does not change. There is no gain or loss realized until a sale occurs, so it des not matter who owns the Pru or the real estate. You can sell Pru at a gain, but unless you sell the real estate ( or other asset) at a loss in the same year there is no offset.

Look at the big picture.... does holding the Pru make more sense than selling it and paying tax on the gain?

That's a much simpler question than the herky-jerk move you're suggesting (which will not make a nickel's difference in tax).

Unless your crystal ball is clearer than everybody else's.

Good luck