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capital gains

Index Mutual Fund or ETF?

Over the last few years exchange-traded funds (ETFs) have greatly increased in popularity. As of 2016, there was approximately $2.9 trillion held in ETFs globally. Because of their growing popularity with financial advisers and individual investors alike, understanding the nuances of ETFs is critical in order for advisers to be better equipped to meet the ever-changing needs of their customers. ETFs are comprised of a portfolio securities designed to replicate a particular index. Common examples of indices that ETFs replicate are the Dow Jones Industrial Average, the Standard & Poor’s 500 index, the Wilshire 5000 Total Market Index, and Barclays Capital US Aggregate Bond Index. Like many stocks, bonds, and mutual funds, ETFs can also be tracked daily in many financial publications and online. Due to the lack of trading in the portfolio there are very little capital gains distributions in which investors must pay taxes. Because of this low […]

Beyond 401(k) and IRA

You’re contributing as much as you’re allowed to a 401(k) or other employer-sponsored retirement plan. If your income allows it, you’re also contributing the maximum annual amount to your Roth or traditional IRA. But you still want to set aside more money beyond 401(k) and IRA, to make sure your retirement is everything you hoped for. What options do you have? Here are some things to consider… Before moving beyond – are you really maxing our your 401(k) and IRA? IRAs and employer-sponsored retirement plans like 401(k)s have some real advantages when it comes to saving for your retirement. So, before you go any further, make sure you’re really contributing all you can. In 2015, most individuals can contribute up to $18,000 to a 401(k) plan, and up to $5,500 to a traditional or Roth IRA. If you’re age 50 or better, though, you can make up to an additional […]

A Few Upcoming Tax Changes to Keep in Mind

As 2013 draws ever nearer, we need to keep a few potential tax changes in mind.  These items are subject to change – they’ve changed in the past at the last minute, so there’s no reason to believe they won’t change again – but if they don’t we should be planning ahead. Flex-Spending Health Accounts If your employer provides you with a Flex-Spending Account for healthcare expenses, there will be some changes coming up in 2013.  This is the kind of account where you set aside a sum of money each payday, pre-tax, that can be used throughout the year on deductibles, non-covered medical expenses, and co-pays. Beginning in 2013, these plans will be limited to a total of $2,500 per year in salary deferral.  This comes about as a part of the Obama-care legislation.  Currently there is no cap on contributions to these plans, although some employers place a […]

Property Flipping Gains Deemed Ordinary Income, Not Capital Gains

Since the housing market downturn, the national pastime of “property flipping” has fallen in popularity – heck, I haven’t seen a TV show on property flipping in ages.  But the activity of buying a fixer-upper, applying a little sweat equity, and then reselling for a profit has been going on ever since Gog first rehabbed and sold that condo-cave with a view. If you (or someone you know) are involved in flipping, there was a recent tax case that you may want to pay particular attention to.  In this particular case, the question of how the sales receipts are classified was addressed, and how the Tax Court responded should be of interest to anyone involved in flipping. Here’s how it played out:  the taxpayer asserted (among other things), that the activity of buying, rehabbing, and then reselling the properties was an investment activity, and so any gains should be treated […]

Estate Tax in 2010: Redux and Predictions

As an update to the earlier post – “Estate Tax Changes for 2010 and 2011” – I’ve recently seen some compelling arguments and interesting predictions about what may or may not happen with the Estate Tax for 2010. Prognosticators Things may be a little different from what I described in the earlier post.  Some very smart guys (John Buckley, Chief Counsel for the House Ways and Means Committee, author and Estate Tax expert Jonathan Blattmachr, and Frank Berall, co-Chair of the Notre Dame Estate and Tax Planning Institute, among others) who make it their business to know everything about the Estate Tax from 1939 forward (when the current system was put in place), have been looking at the possibilities with regard to the projected 2010 repeal of the Estate Tax, and they have several predictions that could come into play. Back to the Future Instead of the supposed $1.3 million […]

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