Conference 7.286::digital

When you do your taxes you keep track of whic stoc you have sold. forget
what dates ore on your invester services stock statment.

.1 is incorrect. That violates IRS rules. If audited .0 would be up the creek.

.0 put the same note in another conference. I have mailed him a solution.
.0 can put it here.

re: .0 
They should have done what you wanted them to do.  But, ...

If I understood this correctly, you now have a paper loss of $930 that will 
reduce your 1990 taxes by some amount.  It seems to me like they did you a
favor.

And Digital doesn't gain anything by the mistake -- in fact if the stock is 
older than 18 months, they might lose because they cannot take the 15% discount
as a current expense.

I'm relatively sure that the solution Howard mailed to the base not author
is the obvious one:  Write to DEC and tell them they screwed up, and to fix
everything the way it should be.

Any transaction like this is subject to verification and correction if it
was done wrong.

re: 1334.4


Ayup!

to .0:

How could you tell so soon which of the shares they sold?
Do you routinely get a new copy of your stock ownership record
when you sell anything?

other replies:

How much time is there to correct such a mistransaction?
Once you get the money, isn't it a done deal?

- tom]

    Hmm, I don't understand the problem in .0. I mean a share is a share is
    a share, isn't it ? There's no old or new ( unless you are talking
    about the stock split, but even then I see no problem ) about them, is
    there ?
    
    Perhaps the author, or Kaikow or Covert, who both seem to understand
    the problem could enlighten me.
    
    -Shantanu

    re:.7
    No, a share is NOT a share is NOT a share.
    
    Each share you own has a buy date and price.  Under US tax law, when
    you sell a share, you pay a capital gains tax (or get a capital loss to
    offset against other capital gains, but not generally against earned
    income) based upon the purchase price.  You also pay regular income tax
    (mostly the same rate at the moment) under some circumstances if it's
    less than two years old.
    
    It's frightfully complex.  I.S. screwed me too by not sending me the
    statement automatically when the Dec. 1 buy took place, so I couldn't
    update my broker, and he needs the various buy dates and prices for an
    option selling system.  The phone system at least was able to get a
    statement mailed to me on demand.

    Re .8 -
    
    O.K. - I understand that bit, but then why does the base-note say that
    his/her $9xx loss is a $9xx gain for DEC ? Seems to me that the US
    tax-man, not DEC, gained from the cock-up. No ?
    
    -Shantanu

	Yep, which shares are sold definitely affects the tax
	treatment. What I don't understand is why .0 wanted to
	sell the most recent shares. It seems to me that, unless
	the oldest shares were very old (when was the last time
	DEC stock was as low or lower than it is now?), those
	would be the ones you would want to sell, since they would
	allow you to deduct a capital loss at the end of the
	year. Am I the one who's confused? I don't see how selling
	the wrong shares could cost .0 $930...

	This is not just an idle question - we're planning on
	selling a few shares soon to do some remodelling...

	Mike

    I first called and then wrote to Investor Services.  They were rather 
    unsympathetic and refused to fix it.   Although the person on the phone 
    did tell me not to be upset!
    
    All I can do is hold the rest of my stock until the price recovers
    enough to make up for my losses this year.  Yes, I will do a little
    better on my taxes this year, but will do worse later, when I show a
    larger profit than is real.  However, I had already deliberately 
    sold a specific number of shares at a loss earlier this year, to improve 
    my cash flow and lower my taxes.  In the meantime, I would have done 
    better to keep my $$ in the bank and earn some interest.
    
    Ya live and ya learn.

    Re .-1
    
    I'm not sure I follow your logic. I would have thought the decision
    process would go as follows:
    
    	1, I want to sell N DEC shares. Note that this decision shouldn't
    	   really have anything to do with taxes. You need some cash.
    
    	2, OK, I'll sell the N shares that were bought at the HIGHEST value
           so that I can realizze maximum tax loss (or least gain) this
    	   year. Cash today is better than cash tomorrow.
    
    To my mind it never makes sense to try and sell the shares with a low
    base value. It is best to defer your gains as long as possible.
    
    Note that I have heard the following eroneous arguments.
    
    	   I'll sell the shares that show a gain. The ones showing a loss
    	   will recover later and I'll sell them when they're showing a
           gain.
    
    I believe that this argument is erroneous. Your previous buy price
    should be irrelevent to the decision to sell.
    
    Dave

    Thanks for reminding my WHY I have my DEC stock certificates  mailed to
    me instead of having investor services keep track of them in some
    computer.
    
    DEC is a computer company.  My stock broker is an investor.  If I wanna
    sell with any kind of strategy, investor service's touch-tone system
    is incapable of helping me.  With a broker, I can say "sell when the
    price hits $102".  If it doesn't look like it will, he'll get back to
    me and together we come to an informed decision.
    
    With touch-tone, you see a price you like today, and tomorrow morning
    they unload it for you.  Alot can happen overnight.  For example, I
    wouldn't want to touch-tone a sell order at 4:00 on one day, and have
    war declared on Iraq at 5:00 that night, and then see what the market
    does at 9:00 the next morning...
    
    Me, I like the feeling of having that beautifuly engraved piece of
    paper locked up in my safety deposit box...

re: .10 and others

The argument that one should maximize losses (minimize gains) generally holds
true.  However, there is another view -- one that I don't necessarily think
applies to me.

In the U.S.A. tax rates for higher income brackets are at or near historic
lows.  Given the budget deficit, it is not unreasonable to conclude that tax
rates will, at some future date, be increased.  If you believe that likely
and if you believe it will happen sooner, rather than later, then realizing
income now, at a 33% or 28% tax rate may make sense.  Similarly, according 
to this argument, one ought not to take a capital loss when the tax break
is 33/28% if next year, or whenever, the break may be substantially higher.

Just something to consider, and of little help to the base noter.

I agree, always sell the shares purchased at the highest price.
As .12 stated this gives you the biggest taz break today.  If you
try all the 4 combinations of stock rising/falling and selling for
biggest gain/biggest loss you see that selling for the biggest loss
always gets you the most money fastest.  Doesn't make a heck of
a lot of difference really except WHEN you will get the money.
In fact if you sell for the biggest gain you are sort of "lending"
uncle sam some money that you won't get back until you sell the
other shares later at a loss (or less of a gain).

There usually is a small incentive to sell older shares due
to long term versus short term capital gains.  If all shares were
purchased at near the same price in the "short term" then you might
want to sell the recent ones so that next time the old ones may
be in the "long term" and give you a tax break.

MUCH more significant factors: 1) what price you sell at :-)
			       2) the tax rate

1 is up to the stock market and your intuition, 2 is controlled 
by our congressmen and whether you sell them in the short or
long term.

It's still probably worth complaining to I.S. since their
system is new...

-steve

You don't gain a lot selling at a loss unless you have sufficient
other gains to write off.  If you don't have sufficient gains
to balance claimed losses, you can't just subtract the difference from 
your regular income, you have to carry the loss to subsequent years.
Rules differ for long and short term losses, moreover, complicating
the general projections.

And I repeat my question to .0: How did you find out so quickly that they
sold the wrong shares on you?

- tom]

re .16:

Wrong.  You can use up to $3000 per year in capital losses to offset
ordinary income.

    They sent me my annual or bi-annual stock statement.  I got it 3 days
    before Christmas.  That's how I found out so fast.
    
    I don't know about anyone else, but my goal is to increase my income,
    not decrease it.  The tax write-off is the silver lining around the
    cloud, but I still would have preferred not to have the cloud.

    
    
    we just found out that investor services didnt buy stock with the money
    my wife had contributed to her account !!!!
    
    i got my stock statement sometime in december and my wife was anxious
    to recieve hers since it was the first time she bought stock...
    
    well weeks go by and no statement so she calls investor services,
    of course gets no where with them.
    
    so last week (friday i believe) i call investor services and request
    an ownership statement, in saterdays mail a paycheck style check
    arrives for my wife for the amount she contributed to by stock for..
    
    we both were then very confused,
    so i call investor services to find out whats going on,
    and they are checking into it for us, we'll see what they come up with.
    
    my wife is a DEC temp secretary and has'nt been working since
    mid-october but that should'nt affect it since she has been
    contributing since june..
    
    i've been calling for her because it took her 1.5 yrs to get in the
    stock plan and she is pretty pissed off..
    
    i'll let you know what happens..
    
    mike
    

    I don't know for sure what happened to you, but I can hazard the
    following guess based on what happened to my wife when she left DEC in
    April a few years back.
    
    The minute your wife stopped working in October, somebody probably
    picked it up as a termination of service.  According to plan rules
    if you stop making payments/end your service with digital during any
    plan period, they simply return your funds and do not purchase stock
    for you.
    
    In my wife's case they returned her December thru April payments
    about three weeks after the June 1st buyout.  It took nearly as long
    to get her stock from the ESOP which was then in effect, and the
    decision to pay out her pension amount rather than let it ride until
    she was 60+ took a little longer.  Digital severed all ties with her
    and all financial responsibilities but it took about four months to
    go thru all that.
    
    I don't want to know how a DEC temp qualifies for the stock fund, as
    such a qualification would seem to make them a permanent employee...
    
    Good Luck, trying to get anything better out of Investor Services,
    since DEC is not likely to want to spend the 15% lowered price for
    someone not currently working for the company.
    

    re .17
    
    Can you advise where that information comes from.
    I had a similar experience with another stock last year. The CPA that
    prepared my taxes echoed what .16 said "You can only deduct a loss from
    a gain".
    
    Thanks.

    Re .21
    
    	I believe he got it from Form 1040 Schedule D.  If you look real
    close at the tax treatment of long-term capital losses, they must be
    offset against capital gains if the loss is greater than 3000.00.
    
    	In digital's stock circumstances the issue of what is current
    income and what is a capital gain or loss is complicated by certain
    rules which affect how long a stock has been held (i.e. More than 2
    years versus less than two years)  The affects can be quite dramatic
    in producing shifts from the capital gain/loss bucket to the current
    income bucket.  If you read the tax information and examples in the
    prospectus which is giving out when you join the plan, it states that
    if you sell within two years, you must treat the difference between
    the purchase price and market price on the last day of the period as
    current income and thus establishes this as your basis price to deter-
    mine your capital gain or loss.  If you sell after two years, you must
    treat the lower of the sale price (if not less than the purchase price)
    or the market price on the first day of the period) as your basis to
    determine your capital gain or loss and treat the difference between
    the purchase price and your basis price as current income.
    
    The result of these calculations can shift large amounts into current
    income and create even larger long term capital gain losses which
    might not be deductible for several years, while demanding taxes on
    the current income (especially given what has happened to the stock
    since 1987).  I would be working real hard to get Investor Services
    to sell the stock you wanterd sold.
    
    Paul N.
    

re .21:

.22 is correct regarding Schedule D.  You can also take a look at various
IRS publications, including "Your Federal Income Tax."

    "You can only deduct losses against gains" is certainly true for
    various forms of gambling -- lotteries, the track, Las Vegas, etc.
    If you blow $10,000 at the tables, it's too bad.  But if you win
    $10,000 then Uncle wants his cut.
    
    Buying and selling DEC stock is not considered gambling.
    
      John

    Re: -.1
    Buying and selling stock is not gambling in the IRS sense, but it sure
    is in the literal sense!

    .25:
    
    I once read of a Christian denomination which (trying to quote from
    memory) "forbids its members all forms of gambling, including the stock
    market".
    
    Dick

Can anyone tell me how to cancel my enrollment in ESPP thru the touch tone
system?

John

	... you can lower your deduction to 0%. Be aware that you only get one 
change per period.  Works the same for SAVE, too.

    
    Yep, I knew it was without interest, that is why I want to do it now. 
    I wasn't sure if just lowering it to 0% would do it or not...
    
    John
    

re: last few

Just wondering, why do so many of us take the time to post "How do you...."
questions in this conference and then wait for a possible reply instead of
simply checking out the Digital phone book and calling the people who should
have the answers.

	/MSL

>        <<< Note 1334.31 by SICML::LEVIN "My kind of town, Chicago is" >>>
>                                -< call and ask! >-
> 
> re: last few
> 
> Just wondering, why do so many of us take the time to post "How do you...."
> questions in this conference and then wait for a possible reply instead of
> simply checking out the Digital phone book and calling the people who should
> have the answers.
> 
> 	/MSL
> 

Have you ever tried to get someone who knows the answers on the phone???

Cheers,

JK
 
              --==++    "CARPE DIEM - Sieze the Day!!"    ++==--                

    
    Re: .31
    
    .32 is right.  Even if they know the answer it is like pulling teeth
    to get it out of them.  NONE of them volunteer any information.  You
    had better know what you need to know and ask specifically.
    
    Steve
    

Gee, yesterday Investor Services went out of their way to meet my special
needs, calling me back promptly with the information I needed.  They could
have just said "Sorry, why don't you get someone else to take care of it for 
you."

I guess I'm lucky.  The Digital employees I've encountered take pride in
their jobs, and do them well.

   Gary

    You're both right! Half the time you're likely to encounter another
    employee who'll go out of his/her way to help you out and half the time
    you'll get someone who will be here only to get a regular paycheck.
    
    ken

    >  Half the time you're likely to encounter another
    >employee who'll go out of his/her way to help you out and half the time
    >you'll get someone who will be here only to get a regular paycheck.
    
    A possiblly apocryphal story.  During an interview Ken Olsen was asked
    how many people worked at DEC.  "About half", he said.
    
    karl

    
    Re: .36
    
    I've never encountered anyone who can actually confirm or debunk
    whether KO actually made that remark, but it is widely accepted
    that it is not a myth.
    
    Steve