6 High-Net-Worth Tax-Trades with Targets on Their Back
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:
- Using collars to avoid paying capital gains taxes
- Using wash sales to time the recognition of capital income
- Using derivatives to convert ordinary income to capital gains or convert capital losses to ordinary losses
- Using derivatives to avoid constructive ownership rules for partnership interests
- Using basket options to convert short-term gains into long-term gains
- 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.
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Definitions of common statistics used in our analysis are available here (towards the bottom)