6 High-Net-Worth Tax-Trades with Targets on Their Back

6 High-Net-Worth Tax-Trades with Targets on Their Back

March 5, 2015 $IEF
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(Last Updated On: March 5, 2015)

Our good friends at the government have compiled their newest list of tax-tricks that anger them the most.

Or in their words, how tax pros make the “Code Less Fair.”

I’m not sure what “fair” means, but let’s roll with it for our current discussion.

First, the source document:


The Six Major Tax Strategies Identified Include:

  1. Using collars to avoid paying capital gains taxes
  2. Using wash sales to time the recognition of capital income
  3. Using derivatives to convert ordinary income to capital gains or convert capital losses to ordinary losses
  4. Using derivatives to avoid constructive ownership rules for partnership interests
  5. Using basket options to convert short-term gains into long-term gains
  6. Avoiding income taxes by deferring compensation

If you aren’t familiar with some of these tax-minimization techniques I encourage you to read the full report.

If you are engaged in any of these tax trades you probably want to keep an eye on lobbying efforts from the banks.

Good luck!

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About the Author

Wesley R. Gray, Ph.D.

After serving as a Captain in the United States Marine Corps, Dr. Gray earned a PhD, and worked as a finance professor at Drexel University. Dr. Gray’s interest in bridging the research gap between academia and industry led him to found Alpha Architect, an asset management that delivers affordable active exposures for tax-sensitive investors. Dr. Gray has published four books and a number of academic articles. Wes is a regular contributor to multiple industry outlets, to include the following: Wall Street Journal, Forbes, ETF.com, and the CFA Institute. Dr. Gray earned an MBA and a PhD in finance from the University of Chicago and graduated magna cum laude with a BS from The Wharton School of the University of Pennsylvania.