Planning ensures that your goals are met.
Risk Management protects your assets.
Portfolios are built with Modern Portfolio Theory.
STRATEGIC TAX PLANNING
I. Strategic Tax planning a. Minimizing Ordinary Income tax
II. Reducing Ordinary Income tax
a. Qualified Defined contribution plans III. Reducing Capital Gains tax
a. Tax Efficient Portfolio IV. Reducing taxes to family, friends and charities
a. 529 Savings Plan V. Income and distributions a. Income choices pre-59.5 VI. Business structure VII. Income Taxes VIII. Tax Rates a. Federal Ordinary Income Taxes
Targeted opportunities designed to help you and/or your business reduce your taxes in Non-Qualified savings/brokerage, Trust accounts, Retirement plans, Annuities and Life insurance. SEE: 1040 TAX Preparation.
Qualified Retirement Plans, IRA, ROTH IRA, Life insurance and Net Unrealized Appreciation (NUA).
b. Minimizing Capital Gains tax
Tax Efficient Portfolio, 1031 & 1035 exchanges, Annuities and Life insurance.
c. Minimizing taxes to family, friends and charities
529 Savings Plans, Coverdell Education Savings Account (Educational IRA) and Charitable giving.
d. Income and distributions
Income and distributions choices.
e. Business structure
Different business structure.
f. Tax computation and rates
Tax computation and rates miscellaneous.
Reducing Ordinary Income taxes.
Qualified Defined contribution plans allow you to save with before-tax contributions which will grow tax-deferred. Before-tax (elective deferrals) contributions to a retirement plan may be matched by an employer's non-elective & elected contributions.
b. After-Tax contributions to an IRA
Distributions are taxed at ordinary income rates on capital earnings. After-tax contributions are withdrawn on a pro-rated basis. There is a trade off: tax-deferred growth for capital earnings taxed at ordinary income rates. This strategy works best in an actively traded account with substantial capital earnings.
c. Optimum ratio of Qualified and Non-Qualified Assets
Qualified distributions are taxed at ordinary income rates. Non-Qualified gains are taxed at capital gains rates. Optimizing the ratio of Qualified to Non-Qualified assets may reduce your taxes. The impact of forced distributions (MRDs) from Qualified plans can be lessened by transferring wealth from Qualified plans to Non-Qualified plans (NUA) and to real estate assets (1031 exchanges). Clients may benefit by purchasing a second home, carrying mortgages, increasing real assets while reducing their tax liability.
d. Life Insurance
Life insurance benefits are a tax-free gift to the benficiaries and they avoid probate.
FREE Insurance QUOTE.
e. Net Unrealized Appreciation
Employees holding shares in an employer's stock may benefit from favorable tax treatment under IRS section 72(o)5: distributions of Qualified stock from an employer. Moving employer's Qualified stock into your Non-Qualified account at a potentially lower capital gains tax rate.
Reducing Capital Gains taxes.
Reduce capital gains tax liability annually in Non-Qualified savings/brokerage and Trust accounts. Review your strategy for offsetting realized gains with realized losses. Structure loss carry-forwards to offset long-term capital gains.
Portfolio details.
b. Optimum ratio of Qualified and Non-Qualified Assets
Qualified distributions are taxed at ordinary income taxes. Non-Qualified gains are taxed at capital gains rates. Optimizing the ratio of Qualified to Non-Qualified assets may reduce your taxes. The impact of forced distributions (MRDs) from Qualified plans can be lessened by transferring wealth from Qualified plans to Non-Qualified plans (NUA) and to real estate assets (1031 exchanges). Clients may benefit by purchasing a second home, carrying mortgages, increasing real assets while reducing their tax liability.
c. Annuities
Tax-deferred accumulation until distribution or annuitization (retirement date) at which time you may choose from different payment options. Your money is invested in one of three styles: fixed rate, equity-index linked, and variable (investment choices). Annuities are a "safe" investment in that they are underwritten by insurance companies with incorporated downside protection (insurance). Like insurance the beneficiaries of annuities avoid probate.
Annuity details.
d. Life Insurance
Life insurance benefits are a tax-free gift to the benficiaries and they avoid probate.
FREE Insurance QUOTE.
e. 1031 Exchanges
Converting rental property into a personal residence without incurring tax consequences:
1031 Exchange details.
Avoiding taxes to family, friends and charities using educational programs.
Contributions of $14k (2015) annually can fund the plan. Up to $70,000 per donor, per child ($14,000 * 5 years), are gift-tax free (if no other gifts are made to the same child for a five year period). The gift is revocable and grows tax-deferred. The funding party retains the right to change the beneficiary at any time.
b. Coverdell Education Savings Account - Educational IRA
Education IRA - contributions are made with after-tax dollars, earnings accumulate tax-deferred and it is an irrevocable gift. Distributions from the account by age 30, for the purpose of higher educational expenses, are not subject to any income taxes or penalties. Maximum contribution $2000 per child, annually.
Income and distributions options.
Distributions pre-59.5 allows you to borrow from a Qualified plan, use the IRS section 72(t) rule, and/or home equity bridge loans. Strategic planning of Incentive stock options (IOSs) and Nonqualified stock options (NQSOs) programs may also benefits from tax planning.
b. Minimum Required Distributions post-70.5
Distributions are scheduled after 70.5 in order that the IRS recovers taxes on elective deferrals (non-taxed contribtions to a Qualified plan). Life expectancy and Minimum Required Distributions (MRD) schedules in IRS Publication 590.
c. Incentive and Non-Qualified stock options
Strategic planning of Incentive stock options (IOSs) and Non-Qualified stock options (NQSOs) programs may also benefits from tax planning.
d. QDROS
The division of pensions and/or retirement plans (because of a marital divorce) through Qualified Domestic Relations Orders.
Business structure - Analysis of Business Structure. Businesses have choices as to how they choose to structure. Each structure has advantages and disadvantage that continue for the purpose of succession planning:
Business structure details.
How your Federal and State Income taxes are calculated:
Income Taxes Computation details.
Federal & State Ordinary Income taxes, Capital Gains taxes, Estate taxes & Generation Skipping Transfer Tax
Tax Rate Table: 10%, 15%, 25%, 28%, 33%, 35% & 39.6%
b. CA State Franchise Tax Table
Tax Rate Table: 9.3%
c. Capital Gains
Short & Long- term rates vary.
d. Estate Tax Savings
Planning so that you can pass on your Estate intact. Estate tax consequences for individuals with an Estate more than $5 million (2011) and $5.43 million (2015).
Estate Taxes
Federal Estate Tax Exemption is $5 million (2011) and $5.43 million (2015) which generates a Unified Tax credit $2.172 million (40% x $5.43 million, 2015).
IRS Estate Tax Table Gift Taxes (GT), Estate Taxes (ET) and Generation Skipping Transfer Tax (GST)
e. Generation Skipping Transfer Tax
Year - ET exemption - GST Exemption - Top Tax Rate
2011-12 - $5 million - $5 million - 35%
2015 - $5.43 million - $5.43 million - 40%
Example:
On a $5.7 million Estate (2008) your estate tax equals $765,000 receiving a $4 million exemption for a married couple with an A/B Trust: Gift & Estate Taxes = $1.7 million * (0.45) = $765,000 [2007-08]. $782k for 2006.
Is it time to take advantage of Opportunities?