As we move forward this year, it appears that there are three issues that will need our focus. (1) Planning for Capital Gains and Losses and Dividends. (2) Estate Planning, and (3) Alternative Minimum Tax Planning. Today, I’m going to focus on dividends. Unless Congress acts, the dividend rates will go up from 15% Federal tax to your marginal tax bracket (as high as 40%). This means that if Congress fails to act, that stocks which are income sensitive, like utilities for example will go down in value as we approach the end of the year because the tax hit on their dividends will be higher. Thus, it might make sense to consider getting away from taxable dividend paying stocks and mutual funds as we get closer to the end of the year. This also applies to “blue chip” industrial stocks to some degree as well. High dividend stocks may very well be less favorable after the first of the year. Tomorrow we’ll talk about planning capital gains and losses.