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Inflation and Independence (or, Was Congress Always THIS Irresponsible?)
7/4/23 Happy Independence Day! Here’s a fun pop quiz for your Fourth of July BBQ: Who was the first American economist to warn about the dangers of inflation? You may not have heard this name before, but it was Pelatiah Webster, who – in a series of essays, some of which he sent to Ben…
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What Can You Do With Real Estate Trapped in a C-Corp?
If you have clients who own real estate in a C-corporation, you probably already know some of the difficulties that stand in the way of clients getting their hands on “their” money (i.e. the assets inside the C-corporation). Consider a case we’re currently working on. (The names are changed to protect client and advisor confidentiality.)…
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New IRS Life Expectancy Tables Creates “Arbitrage” Opportunity
Recent IRS actions may create an opportunity for your clients to receive a premium price for their charitable remainder trust interests. On June 1, 2023, the IRS finally adopted “new” mortality tables. We place the word “new” in quotation marks because the tables in question are based on 2010 data. The world has changed drastically since 2010,…
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Time to Sell Apple?
If you have clients who have more than 10% of their net worth in Apple stock, please read on. You might want to consider how much uncompensated risk your clients are taking. Why? Because trees, even Apple trees, don’t grow to the sky. At its recent highs, Apple is valued at about $2.9 trillion. Is…
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Concentration = Risk Free Return
In the United States, the sale of an appreciated stock holding will trigger capital gains taxes. In addition, 41 states tax capital gains, on top of the federal tax. As of this writing, the effective top federal capital gains tax rate is 23.8%. State income tax rates go as high as 13.3% in California, with…
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Concentrated Position: Return Free Risk Part 1
Excess Risk Just as most people would like to earn excess returns, few people want to incur excess risk. Excess risk is risk that you take that is greater than the amount of risk you would have if you owned “the market.” In the case of the U.S., the S&P 500 is considered representative of…
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Personal Goodwill — Surprising AUM Opportunities?
If you have clients who own and run businesses in which they, as individuals, play an important role, they may have personal goodwill. Identifying personal goodwill can open up valuable planning opportunities, especially for businesses that might be hard to plan for otherwise. Goodwill is an accounting concept, as well as a real world phenomenon. Goodwill…
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Capture AUM and/or Save Clients Tax When Selling a Small Business?
When a client sells, or prepares to sell, a small business such as a dental, medical, veterinary or similar practice, stakes are high for the advisor, as well as the client. You, as the advisor, have a unique opportunity to cement both your relationship with the client and your position as a high-value-added advisor. Mostly,…
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Ouch! Widow Loses $463,676 Tax Deduction – On a Technicality
In a case decided last year, the Tax Court denied Martha Albrecht a $463,676 income tax deduction for about 120 items jewelry she donated to the Wheelwright Museum of the American Indian in Santa Fe, New Mexico. The case, Martha L. Albrecht v. Commissioner, makes for painful reading. The court did not deny that Albrecht…
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Did the Court Create a New Discount in Addition to Control and Marketability Discounts?
If you’ve ever done gift or estate planning, you are no doubt familiar with the valuation discounts for lack of control and/or lack of marketability. You’re probably also familiar with the concepts of inside and outside basis, especially low inside basis and low outside basis. Low outside basis is, for example, where the client owns…