WITH TAXES on most people's minds, here is a warning from Tax Hotline: "Don't let your accountant send you to jail. Some unsophisticated accountants use fictitious cost figures to reduce capital gains taxes -- or even create losses."

It describes understating income, padding deductions and other ways to lower your taxes.

"Remember you sign the return. You're on the hook for tax fraud if you sign a return knowing you understated your tax liability. Fire an accountant who gives in to the temptation to cheat."

HAPPY NOTE: "Look for recovery for REITs (real estate investment trusts) by July," says the Kiplinger Washington Letter. "This is a big change from 1998, the worst year for REITs since 1974. Rebound should bring 'total returns' in the low teens, with yields around 8 percent."

SAD NOTE: "If you put $10,000 into the S&P; 500 in August 1982, you had $193,550 by Jan. 31, 1999, vs. only $114,300 if you gave your money to the average stock mutual fund. Even as the S&P; 500 index rose 28.6 percent in 1998, one-fifth of all equity managers lost money, and only 17 percent beat the big index." (Business Week.)

LOOKS DECEIVE: The New Yorker has a fascinating story about Goldman, Sachs and Co., "the most formidable investment bank on Wall Street."

"In the late twenties, Goldman came under the direction of Waddill Catchins, a born trader. In 1928 he borrowed gobs of money for Goldman's shareholders. By October 1929, shares sold at a lofty $326, but a month later the same shares sold for $1.75."

Pub Date: 3/05/99