But then he got a notice that about half of his approximately US$6,000 loss that year would be disallowed, because the fund reinvested a huge capital gains distribution about a week after he sold some of his shares. "It never dawned on me," he said.
With the fund down another third this year, he sold his remaining shares in October. "I just decided to get rid of it."
For Mahr, who's selling a losing stock -- Lucent Technologies -- for tax purposes for the first time ever, the plan is to use the approximately US$2,000 in losses to offset mutual-fund capital gains and otherwise minimize his family's tax bill.
He'll wait more than 30 days and perhaps buy the stock back at a lower price -- currently US$6, down from the US$20 or so he paid -- if he believes it's a good investment then.
Being able to take a tax loss "almost provides a rationale, if on an emotional level you can't bring yourself to sell a loser," he said. Mahr, a father of two, may be able to wipe out as much as US$320 in capital gains taxes and reduce his and his wife's taxes by about another US$100 by taking the loss on Lucent.
"Look at the cold hard facts," he said, "if you need something to hang your decision on."
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