BY DONALD JAY KORN

FOR INVESTOR’S BUSINESS DAILY

Posted 1/5/2007

The calendar may say 2007. But you’re not yet finished with last year. You still have to file your 2006 tax return.

If you don’t feel up to tangling with the Internal Revenue Code on your own, you’ll probably hire a tax preparer. Maybe you’ve already used a professional to prepare your tax return for many years.

By doing some advance work on your own, you’ll make life easier for your tax pro. And you’ll increase the chance that you’ll legitimately lower your tax bill.

You might wind up paying a lower fee too. Your likely first step is to schedule a face-to-face meeting. Don’t wait too long. As the April 16 filing deadline approaches, it can get harder to set up quality time with your tax adviser.

One tactic is to schedule a meeting for late this month or early February. You likely will have most if not all of your 2006 paperwork by then.

And your tax pro may have more time than in the early spring.

After you’ve scheduled the meeting, begin to organize. Don’t just dump a box full of documents on your tax preparer’s desk.

That will force you and your tax preparer to waste time sorting out your records. And your adviser might have to spend more time afterward, figuring out where everything belongs.

The more time he has to devote to such sorting chores, the higher your fee is likely to be.

But if you organize beforehand, your adviser may have more time to give you advice on taxes and financial planning. That can save you money on your 2006 return or further down the road.

The clearer the picture of your finances you present, the more focused that advice can be. You might learn whether you should invest in taxable or tax-exempt bonds, for example. Or whether a traditional IRA or a Roth IRA is the better choice.

It can help your adviser see whether you’re going to be subject to the alternative minimum tax.

If so, he might suggest that you avoid private activity bonds. Those fund housing projects, hospitals, and the like. Under the AMT, interest paid by such bonds is taxable, not tax-exempt. Also, you should beware of tax-exempt bond funds that hold private-activity munis.

Come Prepared

You may use the time to ask questions too. You can get a consultation along with a start on your 2006 tax return.

To get such benefits, go into the meeting with a calculation of last year’s income. Specify what came from your job, from your investments and from other sources.

Do the same with your expenses. Organize your records to show business-related outlays, charitable contributions, estimated tax payments and so on.

Have your documents ready to back up your math.

“Many accounting firms provide clients with an organizer to fill out in advance,” said David Kahn, managing director in the New York City office of the accounting firm RSM McGladrey. Completing those forms can help you assemble the information you’ll need.

You can use last year’s tax return as a guide so you won’t make vital omissions.

If you track your finances on a computer software program, that will help you pull your records together.

When you meet with your tax pro, bring in a disk from your program in case data are needed. Call first to make sure the preparer’s office supports your file format.

Gathering data and filling out your tax preparer’s organizer are not the only steps to take before your meeting. You also can track the cost basis of any assets you sold in a taxable account in 2006.

Say you sold some stocks last year. Go over your records to figure out when you purchased those shares and how much you paid.

“Don’t forget to add any reinvested dividends to your cost basis,” Kahn said. They will reduce your taxable gain or increase your capital loss.

Suppose you bought stock in ABC Corp. 20 years ago for $50,000. Over the years, you’ve received $31,000 in dividends and reinvested them all in more ABC shares.

If you sold all of your ABC shares last year and received $120,000, you’ll have a $39,000 long-term capital gain. That would count $81,000 as your cost basis: $50,000 paid upfront plus $31,000 in reinvested dividends.

If you didn’t count the reinvested dividends, you’d have a lower cost basis and a higher tax bill.

Higher Cost Basis

“Go through the same exercise for mutual fund shares you’ve sold,” Kahn said. Even if you moved from one fund to another in the same family, that’s a taxable event.

With mutual funds, add to your basis reinvested capital gains distributions as well as reinvested dividends.

Many brokerage firms and mutual fund companies will provide reports to you on the cost basis of securities you’ve sold. But you might have to do some homework on your own, especially for old holdings and for securities you’ve transferred among different firms.

It was a big week for the health care and biotech industries.

With a change in power in Congress, the Democrats have launched their “100-hour plan,” which includes a focus on Medicare drug pricing and reversing the ban on stem-cell research. Also, California Gov. Arnold Schwarzenegger unveiled a plan for universal health care insurance for the country’s most populous state.

On Thursday, a bill to reverse the ban on federal funding on research on new lines of embryonic stem cells passed the House by a margin of 253 to 174. While this may not immediately include enough Republican votes to override the president’s veto threat, that may change after the U.S. Senate passes a more moderate bill and negotiates, in conference committee, enough compromises to capture a veto-proof majority of both chambers.

The stock market prices companies on the basis of where business conditions might be six months or more into the future. Drug discovery at biotechnology companies can take years, and the market sees a favorable legislative environment for these companies developing.

On the other hand, established drugmakers such as Merck ( MRK) and Pfizer ( PFE) are paying high premiums to buy smaller biotechnology companies in an attempt to replace drugs that are coming off patent protection.

While this may be good for holders of biotechnology stocks and funds, it has the potential to dilute the value of pharmaceutical companies. This, combined with an attempt by some members of Congress to reduce the revenue these companies receive from Medicare for their existing drugs, puts big drug stocks in a negative light.

The impact of Schwarzenegger’s universal health care insurance plan for California on health and biotech stocks is less clear. Hospitals, for instance, would have to pay a 4% fee into the system, however it would eliminate most of the unpaid emergency room care given to the uninsured.

For drug companies, this may be a long-term positive, as children or adults who had previously stayed out of the preventive health care industry would be able to purchase prescription drugs. Or, if the critics of the plan are right, drug companies will produce fewer innovative new drugs if they are restricted on pricing.

Top-Performing Health Care and Biotech Funds
Fund Ticker Rating Fund Type 1 Week Total Return
ProFunds Biotech Ultrasec-IV BIPIX E Open-End Fund 2.84%
Biotech HOLDRs Trust BBH D+ ETF 2.63%
Saratoga Health and Biotech-B SHPBX E+ Open-End Fund 2.49%
Rydex Series Biotech-ADV RYOAX E- Open-End Fund 2.42%
Live Oak Health Sciences FD LOGSX D- Open-End Fund 2.36%
GenomicsFund.com GENEX E+ Open-End Fund 2.13%
Franklin Biotechnology DIS-A FBDIX E Open-End Fund 2.09%
Fidelity ADV Biotechnology-A FBTAX E Open-End Fund 2.01%
Fidelity Select Biotechnology FBIOX E Open-End Fund 1.95%
SunAmerica Bio/Hlth FD-A SBHAX E- Open-End Fund 1.90%
Source: Bloomberg

ProFunds Biotechnology UltraSector ProFund was the big winner this week, climbing 2.84% in the five trading days from the close on Thursday, Jan. 4 to the close on Jan. 11.

The fund is designed to return 150% of the movement of the Dow Jones U.S. Biotechnology Index. With weightings of 80.0% biotechnology, 17.8% pharmaceutical, and 1.8% health care products stocks, the top holdings are Amgen (AMGN) , Genentech (DNA) , Gilead Sciences (GILD) and Genzyme (GENZ) .

Next on the list is the exchange-traded fund Biotech HOLDRs Trust (BBH) , which gained 2.63%. It holds the same companies listed above for BIPIX as its largest holdings, along with Biogen Idec (BIIB) , Applera (ABI) , and Medimmune ( MEDI) . Almost 81% of the fund is concentrated in biotechnology companies and more than 15% in pharmaceutical stocks.

Worst-Performing Health Care and Biotech Funds

Fund Ticker Rating Fund Type 1 Week Total Return
IShares S&P Glbl Healthcare IXJ C- ETF -1.15%
Fidelity Select Pharma Port FPHAX D Open-End Fund -0.27%
ProFunds Pharm Ultrasectr-IV PHPIX E- Open-End Fund -0.19%
Pharmaceutical HOLDRs Trust PPH E+ ETF -0.10%
BlackRock Healthcare Fund-I MAHCX E Open-End Fund 0.00%
H&Q Life Sciences Investrs HQL E- Closed-End Fund 0.00%
Fidelity ADV Health Care-T FACTX D Open-End Fund 0.09%
John Hancock Hlth Sciences-A JHGRX E Open-End Fund 0.10%
Vanguard Health Care Fnd-INV VGHCX C Open-End Fund 0.11%
Quaker Bio Pharm-Health FD-A QBPAX D+ Open-End Fund 0.23%
Source: Bloomberg

The health care fund that took the biggest hit this week is the iShares S&P Global Healthcare Sector Index Fund ( IXJ) , an ETF that gave back 1.15% for the five trading days ending Jan. 11. The fund holds 18.0% in health care products, 8.4% in health care services and 6.7% biotechnology. But its largest concentration is in pharmaceuticals at 63.9%, including Johnson & Johnson (JNJ) , Pfizer, Novartis (NVS) , and GlaxoSmithKline (GSK) .

With even more exposure to pharmaceutical stocks, at 94.8%, the Fidelity Select Pharmaceuticals Portfolio is also seen to be at risk from the Democratic-controlled Congress’ attempt to mandate that Medicare negotiate for lower prescription drug prices. The fund’s top holding is Merck, followed by Pfizer, Novartis, Bristol-Myers Squibb (BMY) and Eli Lilly (LLY) .

This has been a good week for funds holding biotechnology stocks. Plus, the long-term seems brighter with the health care industry spending considerable time and money looking inward to see how to become more efficient in the delivery of care and the purchasing of drugs and other health care products.

Unlike last week’s utility funds, health care and biotechnology funds have significantly higher levels of volatility. This accounts for the comparatively low ratings generated by our risk-adjusted return mutual fund model for the best and worst performers. If the president’s threatened vetoes are sustained, the worst performers above could easily switch places with the best performers in the short run.

May 22, 2007 — MLB isnt the only outfit interested in Jason Giambi. According to a person with knowledge of the Angels thinking, the AL West leaders have an interest in acquiring the Yankees DH to bolster a lineup that is last in the league in home runs.

While MLB continues to look into Giambis quotes last week in which he all but admitted steroid use, the Yankees are waiting on MLBs findings before deciding if they can void the rest of Giambis $120 million contract that runs through next season. There is an option for $22 million that wont be picked up.

MLB and the Yankees, who are on the hook for $41.75 million, were tight-lipped about the issue. So, too, was Giambi, who returned to the lineup as the DH against the Red Sox last night after missing the three Subway Series games against the Mets when a bone spur in his left heel didnt allow him to play first base. The commissioners office and the players association have held discussions about setting up a meeting with Giambi to discuss his comments, but nothing was firmed up yesterday.

Giambi homered in his first at-bat, drew walks in the next two plate appearances, scored from first on Robinson Canos triple in the fifth and grounded out in the seventh.

It felt better with the new orthotics, Giambi said of the heel. It took a lot of pressure off. It made a difference and allowed me to swing the bat better.

The Angels interest in Giambi, who was in a 1-for-26 slump and batting .268 going into last nights game, was before the recent controversy surfaced. Its likely the Angels, who have 30 homers, will wait to see what MLB does before pursuing a deal the Yankees would have to listen to very seriously.

The Angels have utility man Chone Figgins to move as well as backup catcher Jose Molina. And their farm system is loaded with young arms. However, if the Yankees have to eat a sizeable portion of Giambis salary to make the trade they would want more back for Giambi. As for Giambi, he has a blanket no-trade clause. However, the Angels play 20 minutes from West Covina, where he grew up, and an equal distance from the Orange County beaches Giambi enjoys.

Figgins, who missed the first month of the season with a broken finger, would give the Yankees much-needed speed. The 29-year-old switch hitter can play third, second and in the outfield. Most important, he would push Robinson Cano for playing time at second if Canos struggles across the first seven weeks continue. Figgins has appeared in 18 games, hitting .108 (7-for-65).

george.king@nypost.com

World number one Roger Federer faces a tough task in his bid to win the French Open for the first time. The Swiss, dreaming of capturing the only grand slam title to have eluded him, was drawn in the same half as several dangerous opponents, including former champion Juan Carlos Ferrero. He could also run into Tommy Robredo, Marat Safin, Ivan Ljubicic, Nikolay Davydenko, David Nalbandian, Guillermo Canas and Fernando Gonzalez.

Twice defending champion Rafael Nadal, the world number two, was handed a far easier draw for the tournament, which starts at Roland Garros this Sunday.

Top seed Federer will start with a relatively easy match against little-known American Michael Russell and should not be challenged in the next two rounds.

From the fourth round, however, things are likely to get a lot more complicated for him as he could meet Spaniard Ferrero, the 2003 champion. If he survives that, a possible semi-final clash against Gonzalez could be on the cards.

Nadal will start against unheralded Argentinian Juan Martin Del Potro and has a smooth passage through to the fourth round, in which he could meet Australian Lleyton Hewitt.

Former champion Carlos Moya of Spain and American Andy Roddick, seeded third, could then stand in the 20-year-old’s way before a possible semi-final encounter with Serbia’s Novak Djokovic, seeded sixth.

England’s Tim Henman will play Latvia’s Ernests Gulbis in the first round. If he wins, and beats 25th seed Robin Soderling or Albert Montanes in the second round, the British number two could then take on reigning two-time champion Rafael Nadal in round three.

Gulbis, 18, is a talented right-hander who has shot up the rankings since turning professional in 2005. He ended 2006 ranked 139th position in the world, and is currently 84th in the charts. He has already won challenger events in Besancon and Sarajevo this year. Henman, who has been troubled by knee problems this season, has slipped to 52nd in the world after a poor start to 2007. He has yet to win even a set in his two matches on clay this year. He was dumped out of the Masters event in Monte Carlo in April at the first-round stage by Juan Carlos Ferrero, and suffered the same fate at the hands of Nicolas Almagro in Rome earlier this month. Henman chose not to compete in the recent Masters event in Hamburg in a bid to fine-tune his preparations for Roland Garros.

In the women’s draw, the top contenders look set to progress smoothly through to the latter stages. World number one Justine Henin, who like Nadal is chasing a third successive crown, starts against Russia’s Elena Vesnina, while Maria Sharapova, the second seed but not a clay court specialist, will face French woman Emilie Loit in the first round.

The draw in full:

Men (w-wild card; q-qualifier; ll-lucky loser):

Roger Federer (1), Switzerland, vs. Michael Russell; Qualifier vs. W-Thierry Ascione; Qualifier vs. Potito Starace; Carlos Berlocq, Argentina, vs. Julien Benneteau (30); Juan Carlos Ferrero (17) vs. Amer Delic; Stefan Koubek vs. Qualifier; Nicolas Lapentti, vs. Alexander Peya; Jan Hernych vs. Mikhail Youzhny (13); Tommy Robredo (9), vs. Sergio Roitman; Chris Guccione vs. Qualifier; Janko Tipsarevic vs. Qualifier; Qualifier vs. Marat Safin (22), Russia

Filippo Volandri (29), Italy, vs. Qualifier; Martin Vassallo Arguello, Argentina, vs. Alejandro Falla, Colombia; Ruben Ramirez Hidalgo, Spain, vs. Stanislas Wawrinka, Switzerland; Arnaud Clement, France, vs. Ivan Ljubicic (7), Croatia Nikolay Davydenko (4), Russia, vs. Stefano Galvani, Italy; W-Alexandre Sidorenko, France, vs. Werner Eschauer, Austria; Michael Llodra, France, vs. Nicolas Devilder, France; Justin Gimelstob, United States, vs. Nicolas Almagro (32), Spain; Juan Ignacio Chela (18), Argentina, vs. Fabrice Santoro, France; Olivier Rochus, Belgium, vs. Gael Monfils, France; Qualifier vs. Qualifier; Lee Hyung-taik, South Korea, vs. David Nalbandian (15), Argentina;

Richard Gasquet (11), France vs. W-Nicolas Mahut, France; Kristof Vliegen, Belgium vs. Danai Udomchoke, Thailand; Martin Verkerk, Netherlands, vs. Simone Bolelli, Italy; Victor Hanescu, Romania, vs. Guillermo Canas (19), Argentina; Jurgen Melzer (27), Austria, vs. Jose Acasuso, Argentina

Qualifier vs. Juan Monaco, Argentina; W-Edouard Roger-Vasselin, France, vs. Qualifier; Radek Stepanek, Czech Republic, vs. Fernando Gonzalez (5), Chile; Novak Djokovic (6), Serbia, vs. Qualifier; Sam Querrey, United States, vs. Qualifier; W-Jonathan Eysseric, France vs. W-Olivier Patience, France

Qualifier vs. Agustin Calleri (26), Argentina; Dmitry Tursunov (21), Russia, vs. Alessio Di Mauro, Italy; Fernando Verdasco, Spain vs. Qualifier; Robby Ginepri, United States, vs. Diego Hartfield, Argentina; Daniele Bracciali, Italy, vs. David Ferrer (12), Spain; Marcos Baghdatis (16), Cyprus, vs. Sebastien Grosjean, France; Kristian Pless, Denmark vs. Lu Yen-hsun, Taiwan;

Thomas Johansson, Sweden, vs. Jan Hajek, Czech Republic; Qualifier vs. Dominik Hrbaty (24), Slovakia; Florian Mayer (31), Austria, vs. Paul-Henri Mathieu, France; Vincent Spadea, United States, vs. Gilles Simon, France; Luis Horna, Peru, vs. Nicolas Massu, Chile; Igor Andreev, Russia, vs. Andy Roddick (3), United States; James Blake (8), United States, vs. Ivo Karlovic, Croatia; W-Peter Luczak, Austria, vs. Jonas Bjorkman, Sweden; Qualifier vs. Oscar Hernandez, Spain; Qualifier vs. Philipp Kohlschreiber (28), Germany

Carlos Moya (23), Spain vs. Andreas Seppi, Italy; Florent Serra, France, vs. Igor Kunitsyn, Russia; Robert Kendrick, United States, vs. Qualifier; Guillermo Garcia-Lopez, Spain, vs. Tomas Berdych (10), Czech Republic; Lleyton Hewitt (14), Australia, vs. Max Mirnyi, Belarus; Marc Gicquel, France, vs. Gaston Gaudio, Argentina; Benjamin Becker, Germany, vs. W-Mathieu Montcourt, France; Feliciano Lopez, Spain, vs. Jarkko Nieminen (20), Finland; Robin Soderling (25), Sweden, vs. Albert Montanes, Spain; Ernests Gulbis, Latvia, vs. Tim Henman, Britain; Qualifier vs. Teimuraz Gabashvili, Russia; Juan Martin Del Potro, Argentina, vs. Rafael Nadal (2), Spain

Women

Justine Henin (1), Belgium, vs. Elena Vesnina, Russia; Tamira Paszek, Austria, vs. Aiko Nakamura, Japan; Tamarine Tanasugarn, Thailand, vs. W-Casey Dellacqua, Australia; Agnieszka Radwanska, Poland, vs. Mara Santangelo (28), Italy; Sybille Bammer (20), Austria, vs. Roberta Vinci, Italy; Yaroslava Shvedova, Russia, vs. Qualifier; W-Pauline Parmentier, France, vs. Qualifier; Sandra Kloesel, Germany, vs. Li Na (26), China; Dinara Safina (10), Russia, vs. Yuliana Fedak, Ukraine;

Melinda Czink, Hungary, vs. Tzipora Obziler, Israel; Qualifier vs. Zheng Jie, China; Yvonne Meusburger, Austria, vs. Francesca Schiavone (23), Italy; Severine Bremond (31), France, vs. Michaella Krajicek, Netherlands; W-Olivia Sanchez, France, vs. Shenay Perry, United States; Milagros Sequera, Venezuela, vs. Virginie Razzano, France; Tsvetana Pironkova, Bulgaria, vs. Serena Williams (8), United States; Jelena Jankovic (4), Serbia, vs. W-Stephanie Foretz, France;

Catalina Castano, Colombia, vs. Qualifier; Aleksandra Wozniak, Canada, vs. Ashley Harkleroad, United States; W-Alize Cornet, France, vs. Venus Williams (26), United States; Marion Bartoli (18), France, vs. Aravane Rezai, France; Jarmila Gajdosova, Slovakia, vs. Qualifier; W-Mathilde Johansson, France, vs. Anna-Lena Groenefeld, Germany; Angelique Kerber, Germany, vs. Elena Dementieva (13), Russia; Nadia Petrova (11), Russia, vs. Qualifier; Anastasiya Yakimova, Belarus, vs. W-Stephanie Cohen-Aloro, France; Nuria Llagostera Vives, Spain, vs. Anna Smashnova, Israel;

Akiko Morigami, Japan, vs. Tathiana Garbin (19), Italy; Samantha Stosur (27), Australia, vs. Jamea Jackson, United States; Maria Kirilenko, Russia, vs. Maria Elena Camerin, Italy; Qualifier vs. Vania King, United States; Emmanuelle Gagliardi, Switzerland, vs. Nicole Vaidisova (6), Czech Republic; Ana Ivanovic (7), Serbia, vs. Qualifier; Alberta Brianti, Italy, vs. Sania Mirza, India; Tatiana Poutchek, Belarus, vs. W-Youlia Fedossova, France; Qualifier vs. Julia Vakulenko (30), Ukraine;

Anabel Medina Garrigues (24), Spain, vs. Varvara Lepchenko, Uzbekistan; Elena Likhovtseva, Russia, vs. Chan Yung-jan, Taiwan; Olga Poutchkova, Russia, vs. Eleni Daniilidou, Greece; Jelena Kostanic, Croatia, vs. Daniela Hantuchova (12), Slovakia; Shahar Peer (15), Israel vs. Kaia Kanepi, Estonia; Edina Gallovits, Romania, vs. Vasilisa Bardina, Russia; Vera Dushevina, Russia, vs. Camille Pin, France; Anastasia Rodionova, Russia, vs. Katarina Srebotnik (17), Slovenia; Martina Muller, Germany, vs. Qualifier; Qualifier vs. Sun Tiantian, China; Anastasia Myskina, Russia, vs. Meghann Shaughnessy, United States;

Ekaterina Bychkova, Russia, vs. Svetlana Kuznetsova (3), Russia; Amelie Mauresmo (5), France, vs. Laura Granville, United States; Caroline Wozniacki, Denmark, vs. Nathalie Dechy, France; Flavia Pennetta, Italy, vs. Nicole Pratt, Australia; Yulia Beygelzimer, Ukraine, vs. Lucie Safarova (25), Czech Republic; Ai Sugiyama (21), Japan, vs. Eva Birnerova, Czech Republic; Romina Oprandi, Italy, vs. Meilen Tu, United States; Anne Kremer, Luxembourg, vs. Qualifier;

Alicia Molik, Australia, vs. Anna Chakvetadze (9), Russia; Patty Schnyder (14), Switzerland, vs. Martina Sucha, Slovakia; Kateryna Bondarenko, Ukraine, vs. Zuzana Ondraskova, Czech Republic; Karin Knapp, Italy, vs. Victoria Azarenka, Belarus; Iveta Benesova, Czech Republic, vs. Alona Bondarenko (22), Ukraine; Gisela Dulko (29), Argentina, vs. Qualifier; Julia Schruff, Germany, vs. Qualifier; Lourdes Dominguez lino, Spain, vs. Jill Craybas, United States; Emilie Loit, France, vs. Maria Sharapova (2), Russia.

EAST RUTHERFORD, N.J. (AP) Juan Pablo Angel had two goals and an assist to lead the undermanned New York Red Bulls to a record-setting 3-0 win over the Chicago Fire on Thursday night.

GAME REPORT: http://www.usatoday.com/sports/scores107/107144/MLS762472.htm

Teenage star Jozy Altidore also scored for the Red Bulls (5-1-2), who set an MLS record for the quickest two goals at the start of a game. And Altidore’s goal ? which came just 55 seconds into the match ? was the fastest goal in franchise history.

Angel then scored his first goal at 2:22, allowing the Red Bulls to eclipse the previous record of 3 minutes, which was twice achieved by DC United ? once in 1997 and again in 2001.

Angel, a former star with Aston Villa of the English Premier League, closed the scoring in the 68th minute. After taking control of a loose ball in front of the net and faking Chicago defender Chris Armas, Angel easily beat goalkeeper Matt Pickens.

Red Bulls goalie Jon Conway had 10 saves to post his second straight shutout and the 12th of his career.

Chicago (3-4-1) had 15 shots at goal, but only one legitimate scoring chance. That came in the 56th minute, when Conway turned aside a low blast from Chad Barrett.

For the third straight match, the Red Bulls played without captain Claudio Reyna, who sat out due to a groin strain. First-string goalie Ronald Wattereus and starting defenseman Hunter Freeman both missed the game with ankle sprains.