Tax Efficient Investing

Tax-Managed Factor Strategies

Tax-Managed Factor Strategies Lisa R. Goldberg , Pete Hand , and Taotao CaiFinancial Analysts JournalA version of this paper can be found hereWant to read our [...]

1042 QRP: How to Finance a Seller Note

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 [...]

Is Active Alpha Enough to Cover Taxes?

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 [...]

The Tax Efficiency of Long-Short Strategies

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 [...]

ESOP Attorney — How to Hire One and Why It Matters

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.

529 Plan Distribution Flowchart

I recently had a conversation with a client who had a big fat 529 plan and was planning to take a distribution from it to [...]

How To Sell A Business Tax Efficiently via Structured Installment Sales

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

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.

Taxes are more important than alpha.

Paying taxes is my least favorite topic. Figuring out how to not pay taxes is my favorite topic. Before I continue, if you want to read [...]

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