Taxes and Investing
You sold a stock or rental property with a massive gain. You deferred/avoided tax on the complete capital gain by investing said gains in an Opportunity Fund. Then you decide to use the basis from the original investments as a down payment on an income property and conduct a cost segregation study. This equates to a $300,000 deduction on your tax return while avoiding tax on the capital gains!Read More
The Tax Cuts and Jobs Act of 2017 brought several new opportunities to reduce your tax burden. A few previous options have been reduced or eliminated. First the bad news.
Like-kind exchanges are now limited to real estate. Capital gains in real estate can be deferred into a replacement property if complicated tax rules are followed. The same cannot be said for business property any more.
The good news comes to us in what is known as §1400Z-2 and §1016(a)(38) as added or modified by the Act. This might sound like a mouthful, but once you understand the implications your mouth is sure to start salivating. In a language normal people understand this means ALL capital gains can be deferred with some gains even tax-free at some point. It also means future gains (for a limited time only as we’ll discuss shortly) can be completely tax-free!
Your favorite accountant has received multiple requests to cover these new Opportunity Funds and Zones in detail due to the conflicting and limited information published elsewhere. In this post we will dig deep into the subject, unveiling the nuances you can use to take a serious bite from your tax liability.Read More
In recent times we were told the U.S. was caput because a womanizer like Clinton was president. Did anyone take the time to research Franklin and Jefferson? Caput! I think not!
Then Bush was a sign of the End Days. Nope! President George W. Bush proved to have human failing, but we did fine.
President Obama was the worst. I had clients who came into my office saying their life;s mission was to prevent Obama from getting a second term. What a waste of time! The economy grew, the stock market was up and America and the world did great after a serious economic debacle.
And now we have the hated President Trump. Many tears have been shed. The Supreme Court is forever tainted (unless you read few history books where you’ll discover it was always tainted). I’m not a fan of Trump. I disagree with many of his policies. But not all! An honest person will find issues where agreement exists. Who doesn’t like lower taxes? We can debate who gets how much and the fairness of taxes, but com’on! I also agree with more infrastructure spending. I’m against tariffs which are nothing more than a tax on consumers. Call it a quasi value added tax, if you will.Read More
Large conferences are hard to understand before attending first. FinCon has multiple cultures under one roof. Virtually every interest in the financial community is covered. Finding people with similar interests is easy. Finding sessions tailored to your goals is equally easy. So why did I fail the first year and sail the second?Read More
One of the most difficult decisions you can make as you struggle toward financial independence is deciding between paying off the mortgage quickly or investing the excess funds instead. The water is more muddy when we see a roaring stock market for as far back as the eye can see coupled with low interest rates. The answer seems simple and obvious: pay off the mortgage as slowly as possible and invest the difference in broad market-based index funds.
You might also think people well past the mile-marker of financial independence would have an even easier choice. Once the risk of a market decline passes due to your excessive net worth, it is tempting to automatically choose the course with the greatest opportunity for maximum gain.
Your favorite accountant has struggles with the same decision: pay it off or invest. It all came to a head recently when the topic came up on Facebook. I gave my opinion and the fur flew. Before long my inbox was stuffed with requests for a fully fleshed out explanation of my position.Read More
The stock market is in nose bleed territory and doesn’t seem to want to stop climbing. Economic risks are everywhere. Debt levels are high, interest rates are climbing, a trade war is breaking out and the market valuations are at near record high levels. In times like these investors get scared. The bull market is long in the tooth and “due” for a serious correction. But then again, using a gambling term might not be the best choice when investing your money.
It is rare when a client doesn’t ask me where to invest their excess funds. Virtually every client wants to pull money from the market but doesn’t know where to put the proceeds. Lump-sum payments and accumulated cash in money market accounts cause concern when the stock market would have been a much better choice.Read More
If you’re reading this the day it’s published it means this is the due date for extensions for partnerships and corporations. If you work in a tax office and things are quiet you might want to consider another job. (This is an inside joke directed at a former employee who struck out on her own. If you need bookkeeping in Vegas I know a qualified person to handle that. Seriously.)
I thought today would be the perfect day for me to announce my candidacy for president with a few tax policies I’ll sign into law via executive order if elected. Some of you might be darn excited about this unwelcome event as you think I’m a Democrat. Other might be excited because they think I’m a Republican. The truth is I’m neither. I prefer to waffle between both side of the aisle or as the police call it: walking in a drunken stupor.Read More
One of the first things I did once I reached the age of majority was open a brokerage account where I could buy stocks and other investments based on my research. Shortly thereafter I discovered the ease of mutual fund investing.
I never made the mistake of excessive trading or buying a “hot” stock I heard about at the local pub. I tended to stick with local, regional or very large companies. I choose local and regional companies regardless of size because I could jump in the car and easily visit them. These smaller companies rarely had investors (or a potential investor) show up at their doorstep. But I did.
Big companies thrilled me because they also had a history of increasing dividends (at least the ones I bought). Big companies can weather an economic downturn better and have more resources. However, the big companies were also slow in responding to a changing environment.
Periodically I dipped into bonds in a minor way with my mad money account. I can’t recall ever owning a bond mutual fund. When it came to bonds, though, I never hung around for long.
Another advantage of a mad money account is the ability to