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8:30 AM EST Thursday, December 14, 2006: I'm trying to do what the "experts" say: do some year-end stock juggling to reduce my taxes. What little I've learned:

1. There are two types of gains -- short (one year or less) and long-term (one year and a day). They're taxed by the Feds differently.
2. There are two types of income -- ordinary (from working) and capital investment (from investing). They're taxed differently.

Hence there are four types of income: ordinary short, ordinary long, investment short and investment long. How they're categorized is sometimes out of your control. If your hedge fund loses money, you'd better hope they're smart enough to declare their losses as trading, i.e. ordinary. That means you can apply their losses against your ordinary income.

On the stuff you own directly (not through a fund) you can sell your losing stocks before year's end. You can use those losses to reduce your gains on the stocks you did make money on.

There are gotchas. You can offset capital losses against ordinary income -- but only up to $3,000 a year. You can carry the capital losses forward and offset them against as many capital gains as you have.

It's easier to keep all the gains and losses in their separate categories and see if you can balance them. But it ain't easy and I'm not suggesting that you obsess trying to save a few shekels in tax. My great accountant, Brendan Smith, sent me this paragraph from a tax planning service. It shows how complicated things can become.

Another technique is to seek to “isolate” short-term gains against long-term losses. For example, say you have $10,000 in short-term gains in Year 1 and $10,000 in long-term losses as well. You're in the highest tax bracket in all relevant years (assume that's a 35% bracket for Year 1). Your other investments have been held more than one year and have gone up $10,000 in value, but you haven't sold them. If you sell them in Year 1, they will be netted against the long-term losses and leave you short- term gains to be taxed at 35%. Alternatively, if you can hold off and sell them in Year 2 (assuming no other Year 2 transactions), the losses will “absorb” the short-term gains in Year 1. In Year 2, the long-term gains will then be taxed at only 15% (unless the gains belong in the 25% or 28% group).

Skype changes. I reiterate. Skype is the best phone and video phone service around -- if you're willing to wear a headset. The best holiday present is a web cam. Give it to your children. You can talk with and watch your grandchildren from afar. It's truly wonderful. Skype to Skype computer calls are free -- for phone and video calls. It will probably always be free.

Skype to an outside phone -- a normal landline or cellphone (not a computer) will cost money next year. You'll be able to buy unlimited calling for only $29.95 for the entire year. If you buy before January 31, 2007, it will be only $14.95. That's a genuine bargain. Without a plan, you'll pay 2.1 cents per minute to calls within the U.S. and Canada. International calls cost more. Calls to cell phones overseas are particularly pricey.

Download Skype software here. Buy a headset here. Buy a web cam for the kids here.

Logitech Quickcam Pro 500 webcam. About $90.

Back problems solved: 80% of us have back problems. This is the season for more of them. There'll be more stress. Traveling. Family. Large meals. If your back goes "out" once, it will go out again. Most back problems fix themselves with rest. Most are gone in three weeks. Most don't require surgery or chiropractors. Learning to live with your bad back (I have one) means being very very careful:

+ Never pick up anything heavy. Ask for help.
+ Carry your stuff in a backpack, not a briefcase. Balance is good.
+ Use your arms to lift yourself into and out of chairs.
+ Slide into cars using the central arm rest as support.
+ Don't bend over. Bend the knees. Keep the back straight.
+ Exercise and stretching works. The more the better.
+ Get yourself a decent office chair. I use the Charles Eames Soft Pad chair from Herman Miller. It cost a fortune, but it has saved my back over the years.


Charles Eames High Back Soft Pad. "Only" $1,880. Click here.

Don't automatically download updates. They're likely to be buggy and have new "features" you don't want. There's an old rule in the computer biz: If it works -- even if you have no idea why -- don't mess with it. Do not upgrade to Office 2007, yet. Do not install Windows Desktop Search, yet.

The ultimate in creativity
A burly, tattooed biker stopped by the local Harley shop to have his bike fixed. They couldn't do it while he waited, so he said he didn't live far and would just walk home.

On the way home he stopped at the hardware store and bought a bucket and an anvil. He stopped by the feed store/livestock dealer and picked up a couple of chickens and A goose. However, struggling outside the store he now had a problem: how to carry all of his purchases home.

While he was scratching his head he was approached by a little old lady who told him she was lost. She asked, "Can you tell me how to get to 1603 Mockingbird Lane?"

The biker said, "Well, as a matter of fact, I live close by there. I would walk you there, but I can't carry this lot."

The old lady suggested, "Why don't you put the anvil in the bucket, carry the bucket in one hand, put a chicken under each arm, and carry the goose in your other hand?" "Why, thank you very much," he said and

proceeded to walk with the old girl.

On the way he said, "Let's take my short cut and go down this alley. We'll be there in no time."

The little old lady looked him over cautiously, then said, "I am a lonely widow without a husband to defend me. How do I know that when we get in the alley you won't hold me up against the wall, pull up my skirt, and ravish me?"

The biker said, "Holy smokes lady! I am carrying a bucket, an anvil, two chickens, and a goose.

How in the world could I possibly hold you up against the wall and do that?"

The lady replied, "Set the goose down, cover him with the bucket, put the anvil on top of the bucket and I'll hold the chickens."

How to park a horse.
The Lone Ranger and Tonto walked into a saloon and sat down to drink a Beer. After a few minutes, a big tall cowboy walked in and said "Who Owns the big white horse outside?"

The Lone Ranger stood up, hitched his gun belt, and said, "I do....Why?" The cowboy looked at the Lone Ranger and said, "I just thought you'd like to know that your horse is about dead outside!"

The Lone Ranger and Tonto rushed outside and sure enough Silver was ready to die from heat exhaustion. The Lone Ranger got the horse water and soon Silver was starting to feel a little better.

The Lone Ranger turned to Tonto and said, "Tonto, I want you to run around Silver and see if you can create enough of a breeze to make him feel better." Tonto said, "Sure, Kemosabe" and took off running circles around Silver.

Not able to do anything else but wait, the Lone Ranger returned to the saloon to finish his drink. A few minutes later, another cowboy struts into the bar and asks, "Who owns that big white horse outside?"

The Lone Ranger stands again, and claims, "I do, what's wrong with him this time?"

The cowboy looks him in the eye and says,

(This is the worst)

"Nothing, but you left your injun runnin".

This column is about my personal search for the perfect investment. I don't give investment advice. For that you have to be registered with regulatory authorities, which I am not. I am a reporter and an investor. I make my daily column -- Monday through Friday -- freely available for three reasons: Writing is good for sorting things out in my brain. Second, the column is research for a book I'm writing called "In Search of the Perfect Investment." Third, I encourage my readers to send me their ideas, concerns and experiences. That way we can all learn together. My email address is . You can't click on my email address. You have to re-type it . This protects me from software scanning the Internet for email addresses to spam. I have no role in choosing the Google ads. Thus I cannot endorse any, though some look mighty interesting. If you click on a link, Google may send me money. Please note I'm not suggesting you do. That money, if there is any, may help pay Claire's law school tuition. Read more about Google AdSense, click here and here.
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