The Costs and Benefits of Tax-Loss-Harvesting (TLH) Versus an ETF

By |June 11th, 2021|Research Insights, Tax Efficient Investing, ETF Investing|

Recently, we have experienced a rush of questions from investors/clients who seek our opinion on direct indexing/tax-loss-harvesting ("TLH") and how it compares to the potential tax benefits of an ETF. Unfortunately, there is no easy [...]

Selling a Business? Here are 8 Ways to Minimize Your Taxes:

By |June 8th, 2021|Research Insights, Guest Posts, 1042 QRP Solutions, Tax Efficient Investing|

When an owner sells their business, the IRS and state taxing authorities will be there to take as much of it as they lawfully can. This one sale can lead to the largest tax payment [...]

How to Optimize Fixed Annuity Tax Deferral

By |September 3rd, 2020|Financial Planning, Guest Posts, Tax Efficient Investing|

Annuities are popular tools for retirement income planning. While stigmas exist around some annuity products (for good reason), recent research shows how fixed annuities can add value in the context of retirement income. In addition [...]

Foreign Dividend Withholding Tax Refunds: A Practical Walkthrough

By |May 22nd, 2020|Guest Posts, Other Insights, Tax Efficient Investing|

The world of withholding tax recovery on foreign dividends and interest is woven with intricacies, challenges, and a general lack of transparency. This is mainly due to its complexities and the cumbersome process involved in [...]

Equity Compensation Planning in a TCJA World

By |June 6th, 2019|Financial Planning, Research Insights, Guest Posts, Tax Efficient Investing|

Employee equity & stock options are a major part of the modern compensation plan. That's certainly the case for my financial planning clients. Unfortunately, a search for the best approach to managing your equity opens [...]

Compound Your Knowledge Ep. 13: Opp. Zone Investments, Hiring Losers, & Short Selling w/Insider Buying

By |May 21st, 2019|Compound Your Knowledge, Research Insights, Podcasts and Video, Media, Tax Efficient Investing|

In this week's video, we examine three articles. The first article, written by Adam Tkaczuk, covers a method to make an opportunity zone (equity) investment behave more like a bond. The second article, written by Larry [...]

Structuring Lower Risk Opportunity Zone Investments

By |May 16th, 2019|Financial Planning, Research Insights, Guest Posts, Tax Efficient Investing|

The tax benefits of the new Opportunity Zone program are potentially phenomenal. However, when you dig into the details of the program you quickly realize that many of the investment options are typically higher-risk and [...]

Tax-Managed Factor Strategies

By |May 6th, 2019|Research Insights, Basilico and Johnsen, Academic Research Insight, Tax Efficient Investing|

Tax-Managed Factor Strategies Lisa R. Goldberg , Pete Hand , and Taotao Cai Financial Analysts Journal A version of this paper can be found here Want to read our summaries of academic finance papers? Check out [...]

Buyer Beware: The Reality of Tax-Loss Harvesting Benefits

By |April 26th, 2019|Research Insights, Guest Posts, Tactical Asset Allocation Research, Tax Efficient Investing|

Executive Summary Tax loss harvesting is widely promoted, but we think the benefits are generally misunderstood and often overstated.a recent paper highlighted by Wes on twitter comes to a similar conclusion. Here is a discussion [...]

1042 QRP: How to Finance a Seller Note

By |January 23rd, 2019|Research Insights, 1042 QRP Solutions, Tax Efficient Investing|

Employee Stock Ownership Plans (“ESOP”) create unique opportunities for business owners and their employee-participants to build wealth through their companies. To foster broader adoption of ESOPs, Congress instituted a number of attractive tax advantages benefitting [...]

Is Active Alpha Enough to Cover Taxes?

By |December 26th, 2018|Research Insights, Larry Swedroe, Tax Efficient Investing|

Each time S&P Dow Jones Indices publishes its latest Active Versus Passive Scorecard, the persistent failure of the vast majority of actively managed funds to outperform is highlighted. The evidence on this failure led Charles [...]

Want to Minimize Capital Gains Taxes? Check Out Our Guide to Opportunity Zone Investments

By |November 13th, 2018|Research Insights, Guest Posts, Tax Efficient Investing|

If you have a large "low-basis stock problem," or an "embedded capital gain problem," the Opportunity Zone (OZ) program could possibly be the single largest tax break you’ll ever see. With the right investment, the [...]

Illustrating the Value of Retirement Accounts

By |September 19th, 2018|Research Insights, Guest Posts, Tax Efficient Investing|

What do most people consider to be the biggest benefit of retirement accounts? Many investors and advisors will say, "tax deferral." But a recent article (pdf version) I wrote highlighted that the real value of retirement [...]

Quantifying the Value of Retirement Accounts

By |April 19th, 2018|Guest Posts, Tactical Asset Allocation Research, Tax Efficient Investing|

Many people talk about the tax benefits of retirement accounts. However, few attempt to quantify and estimate the actual benefits. To make matters worse, when the topic is addressed, many of the discussions rely on [...]

The Tax Efficiency of Long-Short Strategies

By |December 28th, 2017|Research Insights, Larry Swedroe, Tax Efficient Investing|

Conventional wisdom can be defined as ideas that are so accepted that they go unquestioned. Unfortunately, conventional wisdom is often wrong. Two great examples are that millions of people once believed the conventional wisdom that [...]

ESOP Attorney — How to Hire One and Why It Matters

By |December 12th, 2017|1042 QRP Solutions, Tax Efficient Investing|

The sequential process by which ESOP advisory teams are assembled by business owners requires that they get it right–from the start. An ESOP attorney is the linchpin in that process. Here is what you need to know.

How To Sell A Business Tax Efficiently via Structured Installment Sales

By |October 5th, 2017|Tax Efficient Investing|

When an owner sells their business, the IRS and state taxing authorities will be there to take as much of it as they lawfully can. This one tax bill can be the single largest tax payment an owner will ever make and may represent over a third of their entire net worth. Furthermore, it comes after years of paying income/payroll taxes, working harder, and generally taking more risks than non-business owners. And when an owner wants to retire, the process is significantly more complicated than an employee who simply has to give a few weeks’ notice and maybe rollover a 401K. That’s because a business owner’s life’s savings is locked up in the value of their business. In fact, selling their business IS their retirement plan. So, accessing that wealth at the best possible price, in a way that is tax and cost efficient, is critical to their retirement. In this article, we introduce a unique service offering that can significantly reduce the impact of taxes and increase the price when selling a business. We’ve designed it to be used by business owners and their financial advisors (Wealth Managers, CFP’s, M&A Advisors, CPAs, etc.). If you are a business owner, or operate on behalf of business owners, read on.

1042 Exchange: Navigating Between a Rock and a Hard Place

By |June 20th, 2017|1042 QRP Solutions, Strategy Background, Tax Efficient Investing|

This particular Greek dilemma is what came to mind when I first encountered an ESOP. I observed that business owners who sold shares to an ESOP seemed, like Odysseus, to find themselves between a rock and a hard place. They could elect to pursue a 1042 exchange and bypass the Scylla of capital gains taxes, but in doing so they had to roll their sale proceeds into qualified replacement property. That path would likely lead to the Charybdis of Floating Rate Notes. These special ESOP bonds are the predominant 1042 exchange asset in the marketplace, a fact that belies their relative shortcomings as an investment asset. Just how unattractive floating rate notes are, and why they became the default 1042 rollover strategy among financial advisors, is the subject of this article. However, unlike Odysseus, business owners seeking to implement 1042 exchanges have more affordable and transparent paths to navigate between a rock and a hard place.

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