You are smart to start your tax planning early in the year. If you are in a higher tax bracket, the rules are different. Consequently, if you are in a higher tax bracket, you won't benefit from this provision before 2006, but you should consider it before selling any of your investments. This special election applies to investments held as of Jan. 1, 2001. If the election is made, you are treated as selling the stock on Jan. 2 at the stock's closing market price and reacquiring it on the same date.
Any gain is recognized, but capital losses are disallowed.
This election may be advantageous should the capital gain tax rate be higher in the year you dispose of the stock. Paying a tax earlier than necessary requires careful analysis. The 2001 estimated tax payment amount has increased if you are in a high income tax bracket. This is important for avoiding underestimation penalties. There are several changes in the retirement plan area that will strengthen your financial picture.