Question : In your recent column on life insurance [Aug.4] you indicated that as the children get older, the spouse can work, generating income which then does not have to be provided by insurance. I resent that statement, because you know 51 percent of all American women with minor children work, (I, for one, have worked since before I was married.) I think you owe a correction to the public.
answer : Try reading the column again. It says: "As they (your children) get older, a surviving spouse has greater freedom to work outside the home . . ."
The term "surviving spouse" (male or female) has to arrange for babysitters, nursery schools, day-care centers or whatever to care for the home and children while he/she is at work.
There was certainly nothing in the column to denigrate the contributitions of working women or to imply that women are not carrying their share (and often more!) of the load.
But I suspect the chip on your shoulder is getting in the way of you judgement and leading you to see offense where there is none.
I think my statement of "greater freedom to work" when children are older and able to look after themselves was and is true, and needs no correction.
Q: I have purchased a new home before selling the home I now live in. Will I be exempt from capital gains tax if I sell my present home within a given time? If so, what is the time limit? If I sell my present home for more than I paid for the new home, is there capital gains tax on the difference? I am over 55 but don't want to use the onetime exemption.
A: You can defer tax liability on sale of your present home if you sell it within 18 months after the purchase of the new home.
If the adjusted sales price of the old home is greater than the purchase of the new home, you may have a tax liability on part of the gain. IRS Form 2119 -- used to report the sale and purchase transactions -- provides the instructions for calculating the gain on which tax is due.
You're probably wise to hold off on using the over-55 exclusion, since any taxable gain is liable to be smaller than the gain you will realize on later sale of the new home.
Get a copy of IRS Publication 528 for a detailed explanation of the tax implications of selling your home.
Q: We are in the 87 percent tax bracket. Would it be better to buy a 14-percent six-month certificate or a 10.25 percent taxfree bond rated AA by Moody?
A: It's pretty easy to figure out the relative yields of the two investments. Simply substract 37 percent from the Yields available now are somewhat lower than when you wrote, but the technique is the same. Using your figures, the certificate will return 8.8 percent after deducting your federal income tax liability.
(If the bond is an issue of your home state, or if you live in D.C., you should also substract state income to get the comarable yield.)
Obviously, on the basis of yield alone, the municiple bond is the better deal for someone in your tax bracket. But these are two different types of investment.
There is, first, a small difference in safety. Although a Moody rating of AA indicates a high-quality bond, you have no guarantee of either interest or prinicipal. The certificate is insured by an agency of the federal governement.
More important, the bond is a long-term investment which locks in the return reguardless of what happens to interest rates. The certificate, on the other hand matures in six months, and then must be reinvested (or "rolled over" into another certificate).
So your decision must take into consideration your opinion of the probable course of interest rates in the next six months. If you think rates will be higher in six months from now, you might take the certificate, then review the situation again when it matures.
But if you believe interest rates are likely to fall, then it might make sense to buy the bond now and be sure of the higher return for a long time.