DOLLARS & SENSE
Diane provided daily financial planning tips on her nationally syndicated radio show, Dollars & Sense, which ran for over two decades. Below are some entries from her archives.
*Tax laws may have changed in years since broadcast.
60 Day Rollover
Distributions from qualified plans generally constitute ordinary income to the recipient when received. When an individual voluntarily affects a rollover of pension monies from one qualified plan account to another, he or she is normally aware that the transfer must take place within 60 days of receiving the check. Some companies, when an employee is terminated or retires, will do a direct transfer for the employee to an IRA account. If the employee’s distribution isn’t handled in one of these two ways, the entire distributed amount will be subject to ordinary income taxes in the year distributed. For some, this could mean a distribution of $100,000 or more. Large distributions that aren’t rolled over within 60 days could quickly thrust an employee into the top federal income tax bracket and state income tax brackets. If the employee is under 59 1/2 years of age, there’s also a 10% IRS early withdrawal penalty. That means the employee is only left with less than half of each pension dollar received. Constructive receipt of a pension distribution is determined by when it lands in the hands of the employee, not when the check gets cashed. If you anticipate retiring or changing jobs and are eligible to receive a pension plan distribution, be sure you work with a financial planner, so the process gets done correctly and isn’t subjected to income taxes. Your retirement dollars are too precious to inadvertently have them go to pet projects of politicians in Sacramento or Washington.
Amending Your Tax Return
As people tax plan, they often pull out prior tax returns to use as a guide. It’s not uncommon to occasionally discover an error or an overlooked deduction. Taxpayers don’t usually jump at the chance to amend a prior year’s tax return if it means they’ll owe the IRS money. Instead, most sit tight, hope the error isn’t noticed, and wait for the statute of limitations to expire. However, people’s attitudes rapidly change when they find an error in their favor, have a net operating loss carryback, or a neglected deduction that would give them a refund. You can amend your last three income tax returns. Form 1040X needs to state the reason why the amended return is being filed. You need to use facts and figures that clearly show the changes between items shown on the original return and the amended return. Treat items in the same manner on your amended return as on your original return. You can’t switch from a joint return to married filing separate, for instance, nor can you change accounting methods from cash to accrual, for example. If you are divorced and are amending an old joint return because of a net operating loss that you want to carry back, you can do so, and you would receive the tax refund. People sometimes worry that if they file an amended tax return, it will call them to the attention of the IRS. It won’t, nor will it extend the three-year statute of limitations regarding the amount of time the IRS has to audit a return unless, of course, you have filed a fraudulent return.
Are You an Over-spender?
Post-holiday time is always a good time to take your pulse on over-spending. Over-spending is something for which we need to take responsibility. It’s all too easy to blame it on store bargains, end-of-the-month specials, going out of business sales, or just keeping up with the Jones. Sometimes we feel we’re owed a shopping spree because we’ve just gotten a divorce or a promotion. To know whether or not you have an over-spending problem, truthfully answer the following questions. Is your spending a topic of dissension between you and your spouse or partner? When you have to put off buying something you really want, do you feel deprived, out of sorts, or downright angry? Do you buy things just because you want them, even when you can’t afford them? If you’ve answered yes to these questions, then you need to confront the problem of over-spending. Look into joining a 12-step group such as Debtors Anonymous. Start keeping a diary of everything you spend and how you’re feeling about the purchases. List your biggest points of temptation, then make a concerted effort to avoid circumstances that put you in temptation’s way. When you feel tempted, call a friend, take a walk, go to a movie or take the kids to the zoo, anything that will change your habits. Finally, set a goal for accumulating money instead of spending it. Put money away in a savings account or an envelope or pay down debt. Track your progress in writing. If Ben Franklin were living today, I bet he’d say, “a dollar saved is a dollar earned.”
Buy or Rent
Is it always smarter to buy a house rather than remaining as a renter? Homeownership has long been “the American Dream.” With current mortgage interest rates at the lowest, we’ve seen in a generation a lot of young people see this as an opportunity to participate in that dream but is it the smartest way to go? You’ve heard people say that renting is like throwing your money away. They say if you buy, you will at least be putting some of the money that was going into rent towards building up equity as you pay down a mortgage. This may all be true, but buying a house may not be right for you. If you are a person whose job keeps you away from home or requires you to relocate every few years, the cost of buying and selling houses along with the cost of home improvements can make home ownership very expensive. Also, if you’re fortunate enough to be renting a place that you like and where your landlady or landlord likes you and doesn’t continuously raise the rent, why buy? It’s not uncommon to find a rental whose owner is content to have a trustworthy renter as a caretaker for the property while providing a little extra income to the rental owner. Buying a house means paying property taxes, fire, earthquake, and liability insurance in addition to mortgage payments. Then there’s the maintenance and yard work. If you’re a single parent or a working couple, is this your idea of a fun way to spend a weekend? If not, then you’ll need to hire someone and add those expenses to the overall cost of homeownership.
Decisions of an Executor
Executors are given court authority to follow the terms of a will and properly distribute the assets in a deceased person’s estate. How well they carry out their duties could have a significant impact on how much of the estate is preserved. If there is no executor or appointed administrator, then any person in actual or constructive possession of any property of the decedent has the power to make certain elections. This would include a trustee. When the final income tax return is filed for the decent, an executor or other responsible person may make certain elections that could dramatically impact estate preservation. They can choose to value the estate as of the date of death or use an alternative date of six months later. There are special-use valuations for closely-held businesses. Some qualified family-owned businesses have a special interest deduction. The individual responsible for settling the estate could request an extension for payment of estate taxes. He or she also determines the deduction of administration expenses and losses and what assets are eligible for the marital deduction. Each of these provisions carries with it some qualifiers. The use of an alternative valuation date, for instance, can only be used if it decreases both the size of the estate and the amount of taxes owed. This is to prevent attempts to get a higher cost basis for beneficiaries. An executor’s duties involve decision-making along with potential liabilities.
Donating a Life Insurance Policy
Donating an old life insurance policy to your favorite charity can be a win-win proposition. In general, the full transfer of an existing life insurance policy to a qualified charity entitles its donor to a charitable income tax deduction. The amount of the deduction will be the lower of (i) the fair market value of the policy or (ii) the aggregate premiums paid into the policy by the donor. The fair market value or cash value would be reduced by any loans that are outstanding. In cases where the cash value is actually larger than the total premiums paid for the policy, the deductible contribution would be limited to the aggregate premiums. It’s important when gifting life insurance policies to a charity that you give up all incidents of ownership in the policy. Any continuing rights in the policy are likely to be treated as a so-called “partial interest,” resulting in the loss of both income tax and gift tax deductions. This means, for example, you can’t donate the cash value and still retain the right to name the beneficiary. If you plan on continuing to make the premium payments on a donated life insurance policy, you should donate the money directly to the charity and let them make the premium payments. If you send a premium directly to the insurance company, you won’t get a charitable deduction for that premium. Donating a fully paid-up policy that has long outlived its usefulness to you can be an easy way to be benevolent without noticeably decreasing your resources. The charity can either cash it out or keep it and collect its face value when you die.
Estate Planning Made Simple
Siblings who have had loving relationships can become embittered towards each other if one feels that Mom or Dad’s Will wasn’t fair when dividing up the estate. Some parents will completely disinherit one child. By doing so, they’re guaranteeing that child will hold bitter memories towards that parent and the other family members. Instead, leave something to him or her, and when doing so, don’t use hurtful language that will be remembered forever. If you really feel one child needs more than their brothers or sisters, it’s better to leave a smaller but equal portion to all your children and put the rest of your estate in Trust. The Trust can then make a distribution to the needier child with the permission of the other siblings. At some point in the future, when the less fortunate child’s financial needs have lessened, the Trust can be distributed equally among the siblings. Naming one brother or sister to dole out money to the other is probably also a mistake. It’s better to split your estate equally and place the money in separate Trusts. The terms of the Trusts can be designed differently. For personal assets, make a list and ask each child to identify the top five items they want in order of preference. Use this as a guide for deciding who gets what item. Without this information, you might mistakenly divide your assets according to each item’s monetary worth and disregard any emotional value. Doing it this way can help in reducing friction.
Getting Kids Started with Investing
How do you get children interested in the stock market and instill a lifelong appreciation for the need to save and invest? The earlier you start interesting children in investing and saving, the better their prospects for a financially independent future. One way is to buy shares of specific stocks that kids recognize. Unfortunately, online brokers that charge minimal commissions usually require a minimum purchase of $1,000. Even through discount brokers, commissions on purchasing just one or two shares can be expensive. Rather than purchase individual company shares, you may find it’s cheaper to invest in a mutual fund that holds some of the above companies in its portfolio. There are a few that allow an opening investment of just $100. With a mutual fund, it’s easy for the child to make additional investments with cash gifts from birthdays or special achievements. You and your child will need to first decide on the companies and then compare your options based on convenience and cost-effectiveness. Regardless of whether you or your children are actually buying the stock or mutual fund, purchases for minors under the age of 18 must be made through a custodial account. An adult, usually one of the parents, is registered on the account as custodian for the child. That parent controls the account. The account bears the child’s social security number, not the custodial parent’s.
Did you know it’s possible to pass on $1,000,000 to grandchildren and avoid having to pay estate taxes on the bequest? Most people are aware of the Generation-Skipping Trust that the Gallo wine family succeeded in getting written into law allowing $1,000,000 to pass to grandchildren free of estate taxes. People may not be aware of a law that allows up to $1,000,000 of real property to escape reappraisal for property tax purposes if passed to grandchildren. Normally when real estate is transferred to another person, the property in question is reappraised, and property taxes are adjusted accordingly. California passed Proposition 193 that amended the California Constitution to exclude from the definition of “change in ownership” certain transfers between grandparents and grandchildren. The new law applies to transfers, including a change in ownership arising on the date of a decedent’s death, occurring on or after March 27, 1996. It applies to the purchase or transfer of real property from grandparents to their grandchild, provided that all of the parents of that grandchild who qualify as the children of the grandparents are deceased as of the date of purchase or transfer. There’s also a special exclusion for the property involving parent/child transfers. To help you get through the claim forms that must be filed with the County Assessor’s office, you may want to use the services of an estate planning attorney. Tax laws are very complicated, and one slip could end up being very expensive.
Long-Term Care Options
Roughly four out of ten people age 65 or older will need at least some long-term care, either at home, in an assisted living facility, or in a nursing home. The majority of people who live into their eighties or even nineties do so in relatively good health. For those that aren’t that fortunate, care can be expensive. Traditionally, care for an elderly relative has been given in the home by unpaid members of the family. With fewer family members available to stay at home and provide this needed care, demand is growing for professional help. Professional help is expensive. Lifetime care costs for an Alzheimer’s patient can easily be as much as $175,000. Be aware that Medicare and Medigap policies cover only a portion of long-term care costs up to 100 days of skilled nursing care and only if the need follows a hospital stay. Although one third of the nation’s long-term care costs are born by the individual from his or her savings and income, one out of three families who care for a seriously ill family member completely deplete their savings. One way of preserving some of the family’s assets is to buy a life insurance policy that pays out a long term care benefit each month until the face value is exhausted. Another solution is to purchase a long-term care insurance policy. These vary in cost, coverage and benefits. It’s important to discuss your options and the need for a long-term care policy with your financial planner before you arbitrarily “sign-up”.
It used to be there were only three generations in a family, the grandparents, the adult children and the grandchildren. Now folks are living longer and we’re seeing fourth and fifth generation families. The financial impact of the demographic change from three to five generation family units has caused the family to focus on financial issues that cross generations. Aging parents who used to only live a few years after retiring are now living 15, 20, 30 years or more. When these retirees run out of money, it’s their children who will be called upon to supplement their parent’s income and potentially face the high costs of long-term care. It’s important to have heart-to-heart talks within the family about finances. Adult children always knew they’d need to set aside money for educating their own children. When it comes to caring for their aging parents, they may not know what they’ll be facing. To relieve some of the financial pressure on working couples, or avoid having ones’ parents dependent on Medicare, it may be advisable to purchase long-term care insurance for parents. It’s also important to have a hear-to-heart talk about estate planning. Business succession, gifting, Living Trusts, charitable donations, a Durable Power of Attorney, or Living Will are all things that need to be discussed now in anticipation of a time when such discussions may become uncomfortable or impossible. Schedule a family conference with an estate planning attorney and financial planner to help in facilitating these discussions. Please, don’t procrastinate!
Naming an IRA Beneficiary
Deciding whom to name as your IRA beneficiary can be fraught with land mines, particularly if you want to stretch out the IRA into future generations. Failing to name a beneficiary is the worst mistake you could make with an IRA. If you die without naming a beneficiary, your IRA will go through the costly and time-consuming probate process. Naming a beneficiary can allow you to take smaller Required Minimum Distributions from your IRA since the withdrawal amount can be over two life expectancies rather than just your own. If you’re married, naming your spouse as your IRA beneficiary makes sense since upon your death your spouse can receive your IRA account free of estate taxes and roll it into her or his name without having to immediately pay income taxes. A spouse can delay taking distributions from an inherited IRA until age 70 ½. In cases where the spouse is older than the owner of the IRA, the spouse may decide not to roll it over. That way they can delay taking the Required Minimum Distributions until the deceased would have reached age 70 ½. If children are named as beneficiaries of your IRA, they don’t have the luxury of rolling it over. If you’ve started to take distributions a non-spouse can continue them at the same rate. If not, they can start taking withdrawals over their own life expectancy provided the choice is made before the end of the year following your death. Otherwise the balance has to come out within five years. Trusts and charities can also be named as beneficiaries.
Painless ways to save!
You won’t be surprised to learn that there are people in every economic income levels that say they can’t afford to save. Saving money can be done every day in little ways. For instance, if you routinely get your hair cut every two weeks, stretch out the interval by an additional four days. At $20 a visit, you’ve just saved yourself $120 a year. Take the time to fill out frequent flyer applications. Miles can add up quickly and redeeming them for a free flight will save hundreds of dollars. When you’ve made that last car or house payment, continue placing that same monthly amount into an investment for yourself. If you hold really old U.S. Savings bonds, they may no longer be earning interest. Don’t use credit cards that charge a fee. That $25 to $50 savings can become significant. If your credit card company duns you for a late fee, give them a phone call explain the circumstances and they may waive the fee. If you’ve reached age 55 your bank or a neighboring bank has a special account with no fees, free travelers checks, and free ATM transaction just for seniors. Ask for it.
See a penny; pick it up; all the day you’ll have good luck. My grandma taught me that jingle at a time in history when a penny was really worth something. Never-the-less it still has merit. Saving a few pennies here and there may seem futile but believe me, those pennies can add up to real money. If you set as a priority, saving money instead of spending money you’d be surprised at where you’ll find those extra pennies. Here are just a few ideas. Instead of renting videos, go to your local library and borrow theirs for free. The same goes for tapes, CDs and of course books. Cancel cable TV; start by trying it for the summer. You’ll find you spend a lot more time reading, doing projects and enjoying the good weather. To decorate a child’s room, get outdated posters for free from video stores and the post office. Children can find crayons, paper, scissors, old used wrapping paper, glue and other stuff a great pastime. Let their imaginations do the rest. Swap babysitting hours with other impecunious friends or with a college student who’d love to trade the use of your washer and dryer for babysitting. Remember if you’re thirsty, water is the cheapest. If you’re not already a vegetarian, stretch your food budget by occasionally eliminating meat and substituting a big baked potato with cheese or other toppings. Also, most kids will happily fill their bottomless pits with beans, pasta and rice. Make collecting cans for cash from recycling @ ECOSLO a family project. Once you start focusing on saving, you’ll be amazed at what expenditures you can eliminate and how much money you can accumulate.
Picturing Your Future
Can you picture your future without a paycheck? If you haven’t been building up a sizable nest egg, that’s exactly how your retirement is going to look. Visualizing a situation brings home the reality of one’s future. Real estate agents tell customers to spruce up their homes with fresh paint, get rid of clutter and do a little decorating so potential buyers can visualize themselves living in your house. Why not take the same approach to visualizing your retirement. How long could you make it without a paycheck? How much money are you wasting on things that clutter up your life? Statistics tell us that half of all working people have accumulated less than $10,000 in retirement savings. Also, over 2/3rds of today’s retirees are living month to month, depending solely on their Social Security. The majority of Americans in the work force has no idea how much they need to save for retirement according to a study just released by the Securities and Exchange Commission. As the Cheshire Cat said to Alice in Alice in Wonderland; “if you don’t know where you’re going, any road will get you there”. Unfortunately, this is the way many people head into retirement. If this is your situation, isn’t today as good a time as any to start working with a financial planner who’ll help you get on the right road to retirement?
Re-Visit Your Will
Have you reviewed your will lately? If it was written many years ago it might not accurately reflect today’s wishes. With the rapid increase in the value of retirement plans, stocks and mutual funds, many people should take inventory of their assets and then check their wills to see if they still want their estate distributed in the dollar amounts or percentage amounts originally stipulated. If your will leaves a specific dollar amount to heirs, that dollar amount may now be rather puny compared to your total net worth. Also if your will says you leave the “remainder” of your estate to another individual or charity, that remainder amount may now be a very significant sum. The same is true where you have identified bequests by percentages. For instance, leaving 10% of a $50,000 estate to the care and preservation of your pet’s burial spot was a much smaller dollar amount than 10% of today’s larger estate. If you’ve identified specific assets in your will to be passed to heirs, you need to check to see if you still own those assets. Some may have been sold or are now worthless. When figuring out your net worth, if it exceeds the $1,500,000 allowed to pass free of estate taxes, you may want to start making annual gifts to children and grandchildren to bring your net worth under that exclusion amount. If you’re planning on donating money to a charity through your will, you may want to instead name that charity as the beneficiary of an IRA or retirement plan. This can save both income and estate taxes when you die.
Reverse Mortgage may not be The Best Answer
If you’re house rich and income poor you may be considering a reverse mortgage. Just beware of the pitfalls. Nationwide many people have taken advantage of a technique that lets them pull equity out of their homes. It is called a reverse mortgage. Unlike a regular mortgage where you make monthly payments to a bank or mortgage company and each year more and more of those payments go towards reducing your loan principle and less and less goes to pay interest, a reverse mortgage pays you. With a reverse mortgage each monthly payment made to you is a loan. The interest on that loan compounds. Not only that, most of these loans are loaded with extra costs. Unfortunately there’s a lack of regulation in this relatively new industry. This makes it easy for lenders to take advantage of elderly homeowners. Usually the specifics of these reverse mortgages are in the fine print. It’s not uncommon to find loan origination fees of several thousand dollars, loan discount fees, a processing fee and mortgage insurance fees. These plus a shared equity can all become part of an expensive reverse mortgage package. Reverse mortgages attract older folks who find their Social Security checks no long provide them with enough income. They have made the common mistake of thinking financial security at retirement means a house that’s free and clear. A better choice, if they had had extra dollars when they were working, would have been to salt those extra dollars away into a side fund. That side fund would be there to supplement their retirement checks and they wouldn’t need to be considering reverse mortgages.
Saving money has little to do with the amount of your wealth and more to do with your priorities in life. People frequently come up to me and say “I listen to your Dollars and Sense programs all the time. If I had any money I’d sure come see you.” It’s nice these public service programs are being appreciated but sad to hear anyone say they can’t afford to save. A recent survey by Consumer Federation of America and Primerica revealed that despite a boom in the American economy, many Americans feel the only way they’ll accumulate any wealth is from a windfall. The survey asked what people saw as their best chance to accumulate ½ a million dollars over their lifetime. Winning the lottery or a sweepstakes was the answer given by 28% of those polled. Another 10% said from an inheritance and 4% said from a large life insurance policy. Less than half, 47% said from investing a portion of their income. These same people were then asked if they could save just $25 a week for 40 years at 7%, how much would they have. Only 5% of the people came even close and thought the total would maybe reach between $150,000 and $200,000. The answer to the question was $286,640. These results point out how little people know about the value of saving on a regular basis. Asked what a $50 weekly savings at 9% for 40 years would bring and only 1/3rd said it would be more than $300,000. The answer is $1,026,853. Don’t procrastinate. Start saving today.
Sell Low then Buy Low
If you ‘sell low and then buy low’ you may be able to produce a tax write-off. There are lots of axioms in the investment world. Here are a few: “Be a bull or a bear, but not a pig”. Another, “the trend is your friend”. Or “when you sell in desperation, you always sell cheap.” And of course “Buy low, sell high”. It seems to be counter-intuitive to human nature to buy stocks when the news is bad and sell when the news is good. Although most people say they are in for the long haul, statistics tell us something different. The average investor bails out of stocks in a mere 10 months and out of mutual funds in 2 3/4ths years. If you’re losing sleep as well as money, you may want to sell and at least use your loss to help save some income taxes next tax filing season. Long term investors who are looking at losses in a mutual fund could temporarily switch out of that fund and into a money market fund. Thirty days later they can switch back and preserve the tax write-off. It’s necessary to wait the thirty days in order to avoid what is called a “wash sale” which would negate the tax deduction.
Special Need Trust
If one of your children is mentally or physically handicapped you may want to consult with an attorney about setting up a Special Needs Trust for that child. People with disabilities are frequently eligible for various forms of government assistance. One of these programs is Medicaid and Supplemental Security Income or SSI. The benefits paid under this program cease whenever the recipient has more than $2000 in their own name. If a parent should die and their disabled child was to inherit his or her parent’s estate, all of those assets would need to be consumed down to the $2000 level before the government programs would again provide for that child. Personally, that is the way I ethically feel the law should work. There are others however who feel since they’ve paid taxes all their lives, programs like SSI should provide for their disabled child. That’s when those folks ask an attorney to establish a Special Needs Trust. This trust can hold the parent’s estate and dole out cash to provide “extras” for the child without forfeiting the government benefits. The trust wording must avoid terms like for “health, welfare and support” lest the trust become null and void in the eyes of SSI. Income from a Special Needs Trust should not be paid directly to the child. Someone else should be the trustee and control the disposition of its income. A disabled person can also establish his or her own Special Needs Trust. There is a requirement that a “payback” clause be included in the wording however.
The many varieties of 529 Plans
The problem of how to save for college education expenses can be both easy to solve and confusing to resolve. There are now over 40 different 529 college savings plans. Each plan is sponsored by a specific state and is thus considered to be a municipal security. The design of the various plans offers several options, age-based models, individual mutual funds, investment-tolerance models and target plans. In addition, some 529 plans have the standard mutual fund commission structure with up front charges while others have no up front charges but instead have back end fees for early withdrawals. Others offer a choice of A. B. or C. accounts. Annual management fees are another issue to evaluate when deciding which state’s plan is preferable. For instance, all of the C shares of mutual funds offered by the American Group of funds charge fees of less than 2% while the management fees of the Strong Mutual fund company’s plan are more than 2 ¼%. Even the age based models of the various plans differ as to what percentage of their portfolios are in equities verses bonds and Treasury issues. One specific state has 40% in equities for a specific age based plan where another state has 60% in equities for the same age based plan.
Tips for Designing a Home Office
If you’re designing a home office you need to set reasonable spending targets for equipment. Technology theoretically is supposed to reduce the amount of time we need to spend in the office. What if we also have an office in our home? Not only are we working an 8 to 5 shift but with the right equipment we can keep on working after dinner or as I do, start our day at 5:30 A.M. To set up an efficient home office you’ll need to target your expenditures for furniture, computer, office equipment and software. If you’re meeting clients in your home office, it will require the appropriate ambiance. If you’ll be spending numerous hours at your computer, that extra kitchen chair isn’t going to work, you’ll need one that’s more contoured. If your home office work space is cramped, you may want to spend a little extra and get a lap top as your full-time PC. Spending a few more hundred dollars will buy you a docking station. This will let you move your lap top without always having to connect and disconnect cables. Unless you have a great neighborhood copy shop, you’ll want to budget for a fax machine, scanner, and copier. Just don’t let all this technology turn you into a workaholic. Take time to smell the roses.
If you’re looking for some tax deductions by selling stock on which you’ve got a loss be sure you don’t do what is called a wash sale. One way to reduce income taxes is to sell investments that you own on which you can deduct a loss. It’s important however not to incur what the IRS calls a “wash sale”. A wash sale occurs when you sell stock or securities at a loss and, within 30 days before or after that sale you directly or indirectly buy substantially identical stock or securities. The deduction of the loss won’t be allowed and your basis of the substantially identical asset is increased by the amount of the disallowed loss. If the number of shares of substantially identical stock purchased is less than the number of shares sold, you can determine the particular shares sold to which you want the wash sale rules to apply. As an example: If you bought 100 shares of XYZ stock on September 21, 2005 for $5000 and on December 28, 2005 you bought another 25 shares of substantially identical stock for $1,125. Then, on January 4th of this year you sold your original 100 shares for $4000 thinking you’d have a $1000 loss. Not so! Your December purchase of the 25 shares within 30 days of the sale makes it a wash sale. Your loss of $1000 gets reduced to only $750 because 25 shares of that sale will be reported under the wash sale rules.