ROANOKE TIMES
Copyright (c) 1995, Roanoke Times
DATE: Monday, December 18, 1995 TAG: 9512180007
SECTION: MONEY PAGE: 6 EDITION: METRO
COLUMN: Money Matters
SOURCE: MAG POFF
Q: My husband and I would like to each give $10,000 to our married daughter for Christmas this year. Can we also make the same gift to our son-in-law?
A: Yes. Any person can give any other person a gift of up to $10,000 in a calendar year without causing any estate or tax ramifications.
Thus, you and your husband can each give $10,000 to your daughter and a like amount to your son-in-law.
If the gift is larger than $10,000, the donor is required to fill out a gift tax form. The excess amount is then charged against the $600,000 estate exemption.
Figuring capital gains
Q: We sold or traded shares of stock in two corporations, and the net profit was $470. Is this the basis for the capital gain, or will we need to go back in time to when the stock was acquired? Can you explain capital gains when one sells a higher stock held for several years and, at the same time, stock in another corporation is purchased at a slightly lower price?
A: Each stock transaction stands on its own. It does not matter that you bought and sold stock in separate corporations at the same time.
Your capital gain is the difference between the price you paid for Company A several years ago, including commissions, and the price you received when you sold those shares of Company A at a profit, less commissions. You will use the net of your actual cost and your actual receipts to determine your profit. Capital gains are taxed at 28 percent.
For the stock you just bought, Company B, you must hang on to your records showing the cost with commissions. When you sell Company B, you will be taxed on your gain or can use your loss to offset other income.
Some rules exist covering the situation of people who sell at a loss in order to claim the loss, then buy back the same - or virtually the same - investment. You cannot repurchase the stock within 30 days and still claim a loss on your taxes. But this is not your circumstance.
Other people sell stock and try to push the gain into the next year by borrowing shares from a broker, but this can be dangerous and is not your situation either.
In your situation, you just handle each stock separately.
Securities rumor false
Q: I have heard that our president has the power to sign an executive order that would convert all 90-day Treasury bills held by American citizens into 30-year bonds. Is there any truth to this statement, and how would it apply to six-month Treasury and one-year Treasury bills?
Also, in the case of government default, what would be the effect on Treasury bills as opposed to government bonds?
A: The rumor you have heard appeared in a newsletter-type publication. It is false.
Peter Hollenbach, spokesman for the Bureau of Public Debt of the U.S. Treasury, said all Treasury securities (bills, notes and bonds) are contracts whose terms must be honored by the government. The story you have heard, Hollenbach said, is "absolutely bogus."
There is no difference between the status of Treasury bills and of Treasury bonds. Both are issued by the U.S. Treasury and are backed by the full faith and credit of the government. The only difference between them is the length of time to maturity. Bills range from 13 to 52 weeks and notes from two years to 10 years. Bonds have a 30-year maturity. All trade on the secondary market, where values can fluctuate in a direction inverse to the direction of interest rates. The principal should be good if the security is held to maturity.
Avoiding stale checks
Q: I withdrew shares from a mutual fund in 1987. I have an original check dated Nov. 13, 1987, in the amount of $643.12.
I deposited the check Nov. 16, 1995, and it was returned from the bank noted that it had a stale date. Is there any way to get the $643.12?
A: The copy of the check you sent shows on its face that it expired after 90 days. The check states that it is void after those 90 days. Such a restriction is common.
Even if that notation did not exist, checks are considered stale under the Virginia Code after six months. Any bank has a right to dishonor a check deposited after that period of time, and the writer of the check has the right to refuse payment after six months.
Yet you held the check for eight years. It makes no sense to hold a check that long, especially when it can be deposited to draw interest.
There is nothing you can do about your bank's position. But the mutual fund still owes you the money, so that is the direction to take. You should write to the mutual fund, explain the situation and ask the company to issue a new check. Send copies of the relevant papers to the fund. They should issue a new check, but you will have lost any intervening growth in the fund's shares.
When you get this check, deposit it immediately.
LENGTH: Medium: 90 linesby CNB