Tax Planning

Unwanted Tax Consequences

There are three taxable events with a mutual fund: (1) sale of securities within the portfolio, (2) the declaration and payment of dividends and/or interest from the portfolio’s securities, and (3) sale of mutual fund shares. Your clients cannot control whether or not a fund is going to sell one or more securities for a profit or loss. Similarly, they cannot stop the payment of dividends and/or interest. The third event is the only one controllable by the shareholder.

Bobrow vs. Commissioner: 60-Day Rollover

A 2014 tax case ruling has changed the 60-day rollover rule. Until recently, you could rollover each IRA account once per calendar year without triggering a tax event and possible penalty (if < 59 ½). Mr. Bobrow, a tax attorney, rolled over several of his IRA accounts back-to-back (end of each year and then again at the start of the next year). This was a red flag to the IRS and the case went to court.

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Vanguard's ETF Patent

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A-B Trusts

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Offshore Tax Havens

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Trust Dismantling

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Online Advisors

Subchapter S Tax Tricks

The IRS is increasing its review of Subchapter S owners who take too much compensation as a stock dividend instead of ordinary income. The dividend strategy means the Subchapter S owner pays less in income, Social Security, and Medicare taxes. Information from the IRS shows > 4 million tax returns were filed as Subchapter S; in 2010, the average pay (ordinary income) for a Subchapter S owner was $35,700.


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U.S. Corporate Profits

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