Booyah Breakdown: It's a Wash

So let's say you sell your shares at a $1,000 loss, but you like the stock and really want it back in your portfolio. Just wait 30 days to buy the shares back if you want to take the loss. And then on day 31, you're in the clear, taxwise, and can buy away! At that point you can have both the stock and the tax loss.

Be sure to go back and read our recent story for more grist.

Jim talks about companies going public and how good that is for the likes of Goldman Sachs (GS Quote). What about the talk I've been hearing of some large companies wanting to go private? How will that affect Goldman? Are they in on deals like that? -- D.M.

They sure are -- and on many levels

To start, companies hire Goldman to find investors who would want to take them private. Or Goldman could represent the private investors and help them search out companies to buy. So there are loads of fees there.

In addition, Goldman has actually bought several private businesses in the past year. Most recently, they've been a part of the Biomet (BMET Quote), Kinder Morgan (KMI Quote) and Aramark (RMK Quote) leveraged buyouts.

And Goldman's latest challenge may be Gap (GPS Quote). According to media reports, the struggling retail company just hired Goldman to explore "alternatives," which many assume to mean they are looking for a buyer.

Goldman is definitely getting a piece of the private equity action. And don't forget, the goal for most of these companies that go private is to come back to the public again. So Goldman could again benefit on that side as well by helping these companies structure their initial public offerings and get them back on the exchanges.

It seems that Goldman could be in a win-win situation. (Why don't I own Goldman, again?)

What happens to a company's stock if it merges with, or is acquired by, another company? Let's say A is bought by or merged with B. What happens to stock of A? Does it still trade?

If a company is bought out by another company, the stock of the company being purchased usually disappears into history. So when Motorola (MOT Quote) bought Symbol Technologies last year, Symbol's shares went to the stock graveyard. The combined company now trades under MOT.

On the merger front, generally the larger company's stock stays, and the little guy's disappears. So when Symantec (SYMC Quote) and Veritas merged back in 2005 (one of the largest mergers in the software industry to date), Veritas' stock went away, and the combined company trades under SYMC.

Now, what happens on your end depends on the deal. Let's say you own Company A and it was bought out for cash. You'd get the cash value of your shares and be free. If you happen to be holding the actual stock certificates of Company A, feel free to give them to your kids so they can doodle on them with crayons.

If the company is purchased in a stock deal, your Company A shares will be replaced with Company B's shares. The number of shares you get will be determined by some formula outlined in the deal. And again, send those Company A stock certificates to the kids for recycling. Of course some deals involve both stock and cash, and in that case you'll get a combination of both, depending on the terms.

So if you hold stock in a company that has announced it is being acquired or is merging with another, do some legwork. Read the press release and check out the company's Web site. The investor relations section should have all the details with constant updates on the deal.

Come see Tracy Byrnes and RealMoney.com contributors Cody Willard and Richard Suttmeier speak at the Society for the Investigation of Recurring Events' annual meeting on Jan. 16 to discuss 2007 investment strategies. The meeting will be held at New York City's Princeton Club, 15 W. 43rd St., at 6 p.m.