Saving the Sales Fees on Treasury Issues

QUESTION: How can I buy U.S. Treasury bonds? Do I have to use a broker, or can I get a better bargain elsewhere?

E. M.

ANSWER: Treasury bonds can be purchased from several outlets. Banks and brokers routinely sell them, but they will probably charge you a sales fee that could run as much as $25 per bond. You might be more interested in buying your bond directly from the U.S. government, which does not charge a sales fee.

Bonds are available, in $1,000 increments up to a maximum of $1 million, from any Federal Reserve bank or branch. The Los Angeles branch is located downtown at 950 S. Grand Ave. You may also buy your bonds through the mail by writing to the Bureau of the Public Debt, Washington, D.C. 20239. Personal checks are accepted.

Although you didn’t ask, you might be interested in a Treasury bill, a shorter-term instrument than a bond. T-bills, as they are known, are sold in three-, six- and 12-month maturities and are available in $5,000 increments from a minimum of $10,000 up to a maximum of $1 million. Interest rates paid by the bills are set at auction every Monday.

You may buy T-bills directly from the Federal Reserve branch downtown every Monday or by mail. To order them by mail, you must send a cashier’s check made out to the Federal Reserve Bank to your closest Federal Reserve branch. For Southern California residents, the best address to use is P.O. Box 2077, Terminal Annex, Los Angeles, Calif. 90051. Certified mail is recommended to ensure that the order arrives at least one day before the auction.

Q: We were recently forced to relocate due to a change in my husband’s job. Unfortunately, we had to sell our home for less than what we had paid for it just nine months before. Can we deduct this loss from either our federal or state income taxes?--C. D.

A: This is hardly the season to be the bearer of bad tidings, but the unfortunate answer is no. According to our tax experts, your residence is considered a personal asset. The Internal Revenue Service does not permit you to deduct from your income taxes any losses suffered on the sale of a personal asset. This restriction applies even though you and your husband were forced to sell your house because of a job relocation. California tax laws on this issue are identical to those of the federal government.

Without knowing the circumstances surrounding your husband’s job relocation, it’s difficult for us to make a terrific suggestion about this. But you might want to consider talking to your husband’s employer about the loss you suffered as a result of the forced relocation and home sale. In some cases, employers will compensate you for losses incurred from a forced move.

Q: I started buying shares in American Telephone & Telegraph in 1951 with an initial purchase of five shares. Earlier this year, I sold my entire holdings, which had a total value of about $35,000. How should I figure my taxable gain on the sale?--M. M. K.

A: Actually, unless you participated in dividend reinvestment programs or failed to keep accurate and complete records of your purchases, your calculation should be a fairly simple one. To arrive at your taxable gain on the AT&T; shares, you should subtract the cost of your shares from the proceeds from their sale.

Even if you bought your shares over more than three decades, if you kept close track of what the shares cost, you have virtually all the information you need. Just add up the various amounts you paid for the shares and subtract the total from your net proceeds after the sale. That’s all there is to it.

Q: In 1979, after being widowed for six years, I sold the house that my late husband and I had owned and took advantage of the $100,000 profit exclusion available to senior citizens. I remarried in 1980. My current husband had also been married previously and had taken advantage of the $100,000 exemption as well, when he sold the house he had lived in with his late wife. Now we own a home together and are wondering if we are entitled to another exclusion. Neither one of us took full advantage of the exemption when we made our first sales. Furthermore, the exemption has since been raised to $125,000. What can we do?--M. M.

A: Not too much. The one-time exclusion is just what is says: a one-time deal. Further, if the entire exemption is not fully used, a person may not reserve the unused portion for later use. In addition, if you or your spouse has ever used the exemption previously--even if it was with another spouse--neither of you may use the exemption in a sale occurring during your marriage.

Carla Lazzareschi cannot answer mail individually but will respond in this column to financial questions of general interest. Please do not telephone. Write to Money Talk, Business Section, Los Angeles Times, Times Mirror Square, Los Angeles, Calif. 90053.