patrick.net

I'm not a taxpert by any measure. I think DinOR is right about ETFs just being standard dividend and gain tax accounting.

What Peter P and I were talking about was derivatives tax accounting, which gets more complex, especially if you're using derivatives to offset risk (hedging).

I'm not sure what happens when an ETF uses derivatives as part of its strategy. Don't some mutual funds do this but the taxes aren't passed on to the investor, instead spread out among the fund as fees? We need a taxpert to chime in.

Garth,

Hording guns are plausible where law enforcement broke down but the system of government hasn't. But generally, it's better to run in those situations than to stay and stick it out.

Astrid,

Since I was born in Idaho, they might let me back. I love my cousins, aunts and uncles and it's God's Own beautiful there. But I'm not sure I could handle it, even as a moderate/liberal R myself. I'd bet that if Roe v. Wade ever gets reversed the ID legislature will move quickly, or even beforehand.

newsfreak,

I better clarify too, that was $600 for one month. And we had an extremely mild winter here.

It's the end of the world as we know it.

It's the end of the world as we know it.

And I feel fine.

I feel fine.

Garth,

But worst case scenario probably won't happen. :P

So I'm sticking to: living close to work, keep my fixed costs low, learn a useful trade, and defer having kids for a few years to see how it all pans out

newsfreak,

My family usually keeps the house at 50F. So my mom and dad has $150 or so gas bills. I think my parents would go even lower if not for the water pipes.

Falun gong = Scientology

newsfreak,

Chicken butchering may also be a useful skill :P

Have you considering chickens for your home? They're good with bugs and true free range ones taste much better than store bought ones.

Garth,

We love to go up to Priest Lake ID in the summer! You're so far north that it seems like it's still light at 10:00pm. On our first trip we were suprised at how nice everyone was and that the sterotypical militia type is really more hype than anything. Makes for great movie scripts though.

When I was growing up, my dad got a deal on a Vermont Casting wood stove. These are usually at least $3500, but this one was forest green, which in the early 80's was unpopular. Anyhow, it was small, but it had a complex draft, oxygen control system that allowed you to crank down the oxygen enough so the fire would barely burn all day on only 1-2 logs. Once the stove got hot, it would heat the entire downstairs. But dad cut out vents to the upstairs and installed some fans that basically pushed the warm air upstairs. We would use about 3 pickup trucks full of wood, which we got for free anyway. As a result, it didn't cost hardly anything to heat the house even when it got very cold.
Here in Alameda, I don't bother to turn on the heat, but my wife gets cold easily, which is funny since she's from PA, so I crank it on from time to time if it gets below 45 degrees. I could go on and on about penny pinching. My grandad taught me all about it, so I bet I've probably got most of you all in here beat!

Nomad,

You had more practice.

However, my grandma would have you beat. We used to have 8 watt bulbs in Shanghai. And she used to use water to wash vegetables, then cloth, then use it to flush the toilet. Back in the early 60s, my dad's family raised rabbits and chicken in their urban home, for meat. They also made noodles by hand to save on the processing charge.

astrid,

What I feel is wrong about the 500K cap gain exclusion could fill a book so I'll try to keep this brief.

1. It instantly created an uneven playing field amongst asset classes.
2. De-stabilized neighborhoods
3. Left everyone with the impression all is well with the economy
4. Created more "greater fools" than you can shake a stick at
5. Fosters an environment where innovation is not rewarded

Other than that, nothing really. It's Friday so I'm better with everything!

newsfreak,

We'll have to check that area out! I've heard a great deal about it over the years (particularly from fisherman). In so far as the stars they look like they are lower on the horizon (optical illusion?) as if you could reach out and touch them. On Priest Lake it would have been nice to have built a place there years back but they started to put up mansions right up to the lake so you can go to one of the many islands to get away from them.

DinOR,

I totally agree. Which is why I think it's better to lock it in now, because it'll be an easy target for repeal in a couple years.

newsfreak,

The last thing I want to labeled as is the "I like Capital Gains Guy". The reason I bang on this drum is that as written the original IRS ruling had it right.

We were allowed to be exempt ONE TIME as we downsize toward retirement, and it was good.

This was never intended to BE the retirement! We have people right here in town that have lived in I lost track of how many different states over the last 9 years that have built and sold mansions and pocketed tax free money ALL ALONG THE WAY! We just can't have a viable economy if all we do is go around selling mansions by the beach, the lake, the mountains to each other.

DinOR,

I'll be more extreme and say that this country's tax policy is quite horrible, in that it taxes work much more than it taxes capital. Housing deductions and exemptions are the extreme manifestation of that unfairness, where the most unproductive capital received the most advantageous tax treatment of all.

newsfreak,

I'm a huge fan of the "night sky"! It always kind of ticks me off when our neighbors in the country would have have these "beacons" on all night and ruin the night sky! They would say it's for "security" purposes. Really? If your wheel barrow is that expensive maybe you should put in the barn! We've seen things like Hale Bopp and other celestial events like the space station pass by that get "washed out" in major metro areas. Have you ever seen a satelite photo of the U.S at night?

However, the $500K exemption is pretty sweet for anyone who cashed out in a boom area. I just can't believe people can stare at $1M tax free and not make run for it, prop 13 or not.

hmm, fuzzy thinking again.

-$1M tax free
+$1M after tax

newsfreak,

Most flippers pay normal capital gain on the profits. I believe California also has a state tax on sale of non-residences.

newsfreak,

Thanks for not taking that in the wrong light! We have a couple here in town that are salvaging a home that is under 900 sq. ft! All done "period perfect". We stop by on our walks and always make sure we give kudos for the fine work they are doing. They're from CA, the husband was a telecom exec. and they just enjoy what they do. If they make a buck I'm happy for them, and you're right, there are droves of people out there giving it a bad name! They can't finish fast enough to move on to their next debacle.

newsfreak,

What you and Linda in LA does is productive. Flippers are like day traders, except with SEC to watch over them.

goober,

Where do you live? And what kind of corn do you use? I heard people use waste corn (too poor quality for feed) for corn burning stoves.

Dinor,
I totally agree. All the houses that are anywhere close to anything with natural beauty is chopped up, sold, and bouht as vacation homes, etc. I can't tell you how many times I go home and see mountain homes in North Carolina and TN that are basically never lived in except once a year for a month. The other day I was on CL and there was a guy asking if he should invest in Memphis, and he had NEVER been there! It's like people don't even care about the neighborhoods anymore, just as long as they can buy cheap and sell high. This pattern, if it continues, will assure people like myself that we'll have to live in the middle of nowhere in suburban wastelands while the areas we cold've lived in will simply be rental homes owned by investors.

-with
+without

:oops:

astrid wrote about planting gardens and also wrote:

> Chicken butchering may also be a useful skill
> Have you considering chickens for your home?
> They’re good with bugs and true free range
> ones taste much better than store bought ones.

A few years back I was camping with some friends in the Desolation Wilderness area (we backpacked in for a few days of fly fishing away from the wives and girlfriends) and we were talking that there are not many Americans left who can kill something and serve it for dinner an hour later…

As bad as things may get it will probably not make sense for most people to have chickens and gardens if they have other skill to trade for food. I'm sure that plenty of people would trade food if I fixed their roof, plumbing or car (or helped them write a business plan)...

goober,

I agree. I am on the waiting list to be adopted by Angelina Jolie and Brad Pitt, but SFWoman would be an even cooler mom :)

If you bought an ETF at $10 a share and at the end of the year it was trading at $15 the only way you should have a taxable event is if you sold on or before December 31st. Randy, Peter P?

Depending on how the ETF is setup, you may have tax liability on income that is not distributed.

Speaking of taxes,
I think there is also an undocumented enormous percentage of people who basically "write off" everything. The kind of people who write off everything from their cars, gas, tolls,and on and on. Some of these people need such a cut, like artists, and small businessmen starting a business. But I know an uncomfortable number of people who actually make very good money and write off every damned thing they can think of. People ask today why our roads, schools, and public buildings lack the funds. Some of it has to do with tax loophole jumpers. I'm all about tightening up some of these laws.

nomadtoons2,

Right on! Vacant 11 1/2 months out of the year is the best use of this country's resources! My father used to say that we could run a mirror image of America just with what's wasted. I'll bet your dad still says it!

Now for my ultimate restoration project! (after I finish the boat)

A Checker Cab! What year? Doesn't matter, they never changed the body style! What could be more fun than that!

Peter P,

That is true. We should always inquire about the "tax efficiency" of our investment vehicles, this can sometimes be as important as management fees. I just tried to keep my answer simple b/c I believe that ETF's have been the right choice for many investors long before they were all the rage. I'd hate to see folks pass up on them b/c of intricate taxation issues on a few select issues. Btw, do you track the discounts/premiums? When I first came across this I thought it was like the ultimate "insider trading" secret. As you're aware some ETF's trade at a discount to the NAV of their underlying securities. Not an instant buy signal but great for value guys.

I remember when the cap gains tax came into play...I was unhappy because I could've used it in previous sales had it been in play. Bad timing. That's one of the reasons we sold last fall...I didn't want to miss that tax advantage again. This is a law that could easily go away because it is not fair, but boy is it advantageous to someone like me. It should be repealed.

Sorry...I'm talking about the 500K cap gains...if that wasn't clear.

nomadtoons2,

Oh do I hear you! Anyway, over the years I've done a 1969 BSA, 1955 Allis Chalmers "B" Series Tractor (lovingly referred to as the ACB) and am currently working on a 1966 Unilite boat. As that nears completion I'm scouting for my next project and thought a Checker might be fun.

And now for the news:

We may not have reached "pre-bubble" prices yet but I was reading that in some CA counties we're reaching "pre-bubble" volumes! O.K so it was 1999 levels but we're finally heading in a healthy direction!

New thread: Inflation and Interest Rates (and the dollar)

Linda in La La Land,

Now I could see if the IRS came out and said you (as a married couple) could have 500K in LIFETIME exemptions! Yeah, I'd be O.K with that b/c it would put it on a par at least to your IRA. Oh and has anyone noticed how "out of favor" IRA's and 401K's have become lately. Suze Orme does one little blurb about how taxes may have to go higher in the future to pay for the bill we are currently running up and everyone (well enough of us anyway) have construed this as an "excused absence" slip? Great! I'm not responsible for my own financial future b/c Suze told me so! Uh, the debate may rage on as to the effectiveness of IRA's but I'm pretty sure she didn't mean it as an excuse not to save or invest.

*Not an endorsement for Suze*

DinOR,

This bubble just does a 180 on normative financial planning. My boyfriend and I spent the last 4/5 years saving money in tax advantaged retirement plans and building human capital, and not getting tied up in high overhead expenses. But of course, we would have "done much better" on if we both came out of college buying something 10X our salary.

Now when this thing blows, the IRS will probably come after us because we'll be the ones with cash and decent paying jobs. It's all the same to the federal government and it'll be easier to squeeze me than bankrupt specuvestors.

Oh boy, JBR talk again...

The Colorado Plateau is a great place to see stars. Bryce Canyon is generally considered to have the least light pollution in the lower 48.

astrid,

I really wouldn't worry b/c I just spoke with a CPA friend of mine when he came up for air after the tax season and he said there is QUITE a buzz about how folks w/higher incomes have been writing off their HELOC's! They are doing it all wrong. Now, it may take years for them to catch up with these people but catch up they will. With so many people doing their own taxes these days I think it will be as simple as them sending out a "brief" letter explaining how back in 2005 you incorrectly claimed interest paid on your HELOC and you now owe X amount of dollars along with a remittance form. It really will be that simple.

Newsfreak,

You're right about the wonderful hot springs. It's gorgeous. Bruce and Demi bought a tiny piece of our old homestead to fill in a little hole in one of their mega-holdings. My Dad, Aunts and Uncles thought they hit the lottery.

Fortunately, the city slickers only offered their exorbitant price for the one little finger. The family gets to keep our homestead. At least till all my cousins decide to cash out -- or the Nez Perce take it back.

SFWoman,

Don't give them ideas. :P They already used Sierra, Sequoia, Tahoe, Tundra, Santa Fe, and Yukon.