Tax Strategies Scan: Tax Planning and the Error-Proof Portfolio

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Our weekly roundup of tax-related investment strategies and news your clients may be thinking about.

3 tax issues every investor must factor in before they sell: Investors need to know the tax issues involved before selling their investments, according to DailyFinance. They are advised to sell old assets as profit from the sale is subject to long-term capital gain tax, which is lower than the tax on short-term capital gains. Investors also should sell stocks they have owned more than 60 days during the roughly four-month period surrounding the ex-dividend date to get a tax break on dividend income. Investors may sell investments that incurred a loss to take capital losses to offset taxes on profit from other assets, but they should not buy back these investments within 30 days as they would no longer be allowed to take the tax loss. — DailyFinance

Year-end strategies for retirees to trim 2014 tax tab: Investors are advised to do a year-end planning to reduce their tax bills, which may increase because of their investment gains during the year, according to Kiplinger. Capital-gains tax bills are expected to be higher this year as most investors may have used up their carryover losses from the 2007-2009 market collapse to offset profits in the succeeding years, experts say. Read some strategies that investors can include in their year-end tax planning to lower their bill for the year. — Kiplinger

The Error-Proof Portfolio: Dos and Don’ts for Year-End Tax Planning: You sometimes hear that you should conduct your portfolio maintenance — checkups, rebalancing, tax-loss harvesting, and so forth — at year-end. But in reality, waiting until late December is apt to be too late if you’re aiming to minimize your tax bill. You may lose your chance to act pre-emptively to avoid capital gains distributions from your mutual funds, for example. And the longer you wait, the more you court the risk that you won’t conduct these year-end portfolio maneuvers at all. After all, December is often a busy month, period. — Morningstar

Take a day to game plan like a head coach: Now is the time to prepare for your annual strategic planning day. You say you don’t have a strategic planning day? Then make this your first annual. The best time for this planning is between November 1 and the end of January, depending on the nature of your business. It’s the best time because yearly results are pretty well known, and some slowdown in business allows for time to think. If you are new to this kind of planning, give it a try. It’s almost certain you will continue because results are substantial. Integrating strategic planning into business operations is a sign of a well-run business. Here is a checklist to serve as a guide. Begin with three basic strategies for relatively new or smaller businesses. [The first:] Plan tax strategies for the coming year. Ask your tax adviser for assistance. — The Durango Herald

Strange financial advice: “Shooting the Sacred Cows of Money,” a financial advice video created by author Robert Kiyosaki, is full of non-sense, according to Motley Fool. The article dissects and disputes several points in the video including how being an employee is the highest-risk profession, the evils of taxes and inflation, advice on retirement savings, and more. — Motley Fool

How founders of new hedge funds can avoid most taxes: There are advanced planning strategies that will enable hedge fund general partners to avoid certain taxes legally, according to Forbes. Founders of most hedge funds who serve as general partners and owners of the management company may avoid paying income tax on the management fee that they receive as well as taxes on the carried interest. A portion or all of the hedge fund partners’ carried interest may grow without paying the taxes if they use “certain sophisticated insurance solutions,” says Frank Seneco of the boutique advanced planning firm, Seneco & Associates. — Forbes

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