Bogleheads.org

Mortgage interest is not an exclusion for AMT, so it is a deduction for both calculations - regular tax and AMT. The only way having a mortgage interest deduction would help is if it was quite large and you had a sizable difference between your incremental AMT rate and your incremental regular tax r...

One of your option grants has 5 years left until expiration, with a strike price of $21 while today’s market price is in the mid-50’s. I would venture a wild guess that these options would be priced by the Black Scholes formula around $50 or so. This price would be a fair market value for these opti...

2008 was a great year to TLH and accumulate capital losses while staying fully invested. I locked in those losses and swapped into similar but not identical funds (S&P500 for Russell 1000 for instance). I ended up with a huge amount of capital losses to offset future distributions. Finally in 2...

I'm confused on the RSU's. I paid taxes (in the form of shares) on them when they vested. So wouldn't I only owe taxes on the gains ($7 long term, $3k short term). Wouldn't only the exercising of the options be considered additional income, plus the $3k of short term gain on the RSU's. So I'd have ...

The value of the long ter shares is currently $13k (and I automatically paid taxes in shares when these vested in 2012). The capital gains on those RSU's is about $7k. The RSU's that vested in in Jan. 2013 (also already paid income taxes on the vest) have a capital gain of $3k. So if the stock pric...

NSO's - no way I would execute before year 5. After that I look at remaining time value as a fraction of Black & Scholes value - when it gets below about 20% I look to exercise & sell (cashless exercise). As another poster has pointed out - it all gets taxed as ordinary income. Not ST cap g...

I have about $13k of RSU's I have held long enough for long term capital gains. And another $12k that would hit short term gains (would be long term in 6 more months). Can you kindly clarify for us these values? For most of us, we pay ordinary income tax on RSU shares when they vest. Of course, we ...

I'm married filing jointly and would expect my after deduction gross to be around $175k for 2013. Looking at 2013 tax brackets, it looks like if I sell it all now, about $48k would be taxes at 28% and $60k would be taxed at 33%. I'm wondering if I should try to sell up to the 28% tax bracket and ho...

Articles like this pander to the public's fascination with the super rich. The Wall Street Journal does the same in their Real Estate section when they regularly highlight some fantastic mansions...with multi-million dollar views, 12,000 square feet, etc. I see very little educational in articles li...

The problem is that 95% of the people who have invested with him over the years did not invest from inception. It's the same problem we see with all active management... New fund does well, leds the pack on 1-year or 3-year return lists.... the masses pile in, the fund underperforms from then on......

Wagner, good illustration. Let's assume you are completely happy with the replacement fund. And let's assume that the gains on the property exactly equaled the amount of losses carried forward. You now have your holding in the stock fund at a cost basis proportionately lower then originally to equa...

The quirks of the tax laws make tax-loss harvesting very very important for some folks. The issue is to realize that TLHing now will be important to some folks because of things that will happen in the future. Exactly, and I can give a personal example of this. In 2000 my wife received a modest inh...

Raymond wrote:I live in Texas, and I use the Utah 529 plan (which uses Vanguard funds):

Same here.

Does anyone have a good sense of how much they've saved in "tax alpha" from doing this? Here is a study of the benefits of TLH, which can average in the range of 0.6% per year . In the early years, you have higher savings rates - from the deduction of $3,000 per year in tax losses. In the...

I don't see how this isn't a legitimate short term loss. The OP didn't say he already had some of XYZ before he purchased the 200 lots at $10. If he already owned some shares of XYZ, the question is a different one....and I am only addressing the situation where he didn't own any of it already. Best...

What diversifying effect does holding an MLP have? How is holding a MLP different from holding shares of Chevron, Exxon, etc.? Thanks, J It is like holding Exxon or Chevron, but without the exploration segment and without the refining segment. All that is left is the transportation segment, compris...

You wrote. I think those who rightly warn that stock market risk is real, and that every 50% decline will not automatically be followed by a full recovery within 5 years, fail to appreciate that where an economy contracts and resuscitation efforts fail, it is very likely that its sovereign bonds wi...

It is all in how you define risk. If you define risk as "the likelihood that stocks will underperform bonds", then historically the "risk" of stocks has diminished with time. If your alternative investment is bonds, then I would think this risk is pretty important to a long-term...

It is hardly a secret that that it is not true that stocks always outperform bonds for periods of 30 years or more. It was all over the financial news in 2011 that LT bonds had outperformed stocks for thirty years. And, as Larry Swedroe points out, LT bonds outperformed stocks for 40 years from 196...

The table below shows the results for the 10-year period 2003-2012. Note that during this period, the S&P 500 Index returned 7.1 percent and the DJ-UBS Commodities Index returned just 4.1 percent. Thus, one would think that in hindsight adding a 5 percent allocation of commodities and reducing ...

Most of the leading academics in finance argue that risk does not diminish with time. Paul Samuelson has written dozens of articles on this, and Zvi Bodie and Robert Merton are now carrying the torch attempting to spread the word with little avail. I see tons of posts saying that "I have a lon...

Thank you for your kind words. As for just using "Hot Hands". It is a "stock only" portfolio, which may or may not be appropriate as a whole portfolio. While the Hot Hand approach performed spectacularly well from 2000-2007 (using International Explorer four years in a row durin...

Ive contacted a Fisher Investment person, am supposed to get back with my completed paperwork next week (they reportedly use a market neutral practice and promise to beat any system I am using. I read the blogs here re Fisher and am getting more and more skeptical so am sitting on the paperwork now...

This is revisionist history. Before SS benefits in the 1940s the idea of retirement as we know it was reserved for only the wealthy - the upper 1-2% of the population. Nearly everybody else depended on their extended family in old age. Even as late as 1970 the standard investment advice was governm...

A portfolio of 100% immediate annuities isn't without risk either. Sure, you have avoided stock market risk and interest rate risk and inflation risk....but you have counterparty risk. If an insurance company fails (presumably you have multiple annuities with multiple insurance companies), you have...

The key point is identifying an income "low water" mark and being super conservative with PART of your wealth in order to stay above that. (We are talking in terms of cash flow, in real dollars, not in terms of portfolio value.) This part can be covered with Social Security, Pension, SPIA...

Portfolio wealth is what protects your lifetime standard of living. I think the epiphany is somewhat lacking in significance....Gordon I agree. The real breakthroughs were the introduction of Inflation-protected bonds, and the introduction of inflation-adjusted immediate annuitites. These can - and...

Even the most hardcore EMH and indexing proponents have gotten suckered into attempting to time the bond market. All I had to do was draft a reasonable investment plan that involved a deflation hedge and then rebalance... Timing the market has nothing to do with EMH or indexing. You can do both and...

I call that "churning the account". Care to elaborate? You are paying 0.9% in the management fee. Then - due to the high turnover - you are paying another similar amount in transactions costs. Your total cost is very high with this structure. The evidence is exceedingly strong that active...

Thanks for sharing. I wish Mister Booraem had addressed Vanguard's extremely poor marks in the past for their proxy votes as a "pay enabler" and rarely voting 'for' shareholder resolutions, compared to other mutual fund companies. Vanguard has one of the worst records regarding climate ch...

I split international into EAFE, EAFE Value, Emerging Markets, and FTSE ex-US Small in a 1:1:1:2 ratio with the following ETFs: EFA/EFV/VWO/VSS. My strategy is similar to RNJ's. I slice and dice in international between Developed Value, Developed Blend, Developed Small, Emerging, Emerging Small/Val...

As noted above, only the volatility is different from its asset class as a whole - not its return profile. It is uncompensated risk that can (and should) be diversified away. I agree, but be sure you are talking about "uncompensated" risk. If you are granted stock options as part of your ...

I've also been advised to consider spray foam to the underside of the roof ceiling and to seal off the ridge vents with spray foam running between $2-3 per sf. Hi Swampy: I am far from an expert in these things, but I have firsthand knowledge of this particular issue. My wife and I are building a h...

For quite a few years now, my employer has paid KPMG to prepare my taxes, and this is because I was on a foreign assignment and have significant foreign tax credits. I have reviewed the tax returns in the past, and I can confirm that KPMG prepared two sets of foreign tax credit forms - one for regul...

Staying the course is easy when things just plod along. Big jumps forward like this create, for me, just as much of a feeling that I need to *do* something as when there are big jumps back. I began investing in the early 1980's. Here is how the S&P500 did in those years: 1982: 21.6% 1983: 22.6%...

I wondered the same thing earlier today. :wink: I don't see how it is possible for tax-advantaged accounts to be that large today. Maybe for person just starting out at age 21 and contributing the max every year for the next 40 years.... Remember, a person could roll-over their 401k plan AND their ...

...but if you read the terms of the DAF, they're under no actual obligation to do so, particularly if your requested entity doesn't meet their requirements. That is exactly the same for your daughter. She isn't under any obligation to donate the money to the charity you choose. The daughter doesn't...

I don't know the exact numbers, but I believe I have read the the median stock return is less than the mean stock return. This is because the downside potential of a stock is limited to 100% loss, where the upside potential is unlimited. As a result, a small fraction of stocks with stellar performa...

...but if you read the terms of the DAF, they're under no actual obligation to do so, particularly if your requested entity doesn't meet their requirements. That is exactly the same for your daughter. She isn't under any obligation to donate the money to the charity you choose. But the consequences...

How about buying stocks that don' t pay a dividend?

Wagner, have you thought through what you wrote? Can you not see the distinction in the examples you made up yourself? Giving a child $10,000 as a gift to avoid PMI?--what is possibly illegal, unethical or un-anything about this? In your mind, you don't see the strings attached to this "loan&q...

Investment banker, corporate executive, independant consultant. High income, high savings rate. In my experience to have a sizable portfolio, you need both a strong "offense" and a strong "defense". A strong offense is the ability to earn lots of money. But you also need a defen...

I'm trying to decide whether the simplicity of Total World outweighs the benefit of tax loss harvesting. There is no reason you can't TLH even if you do use Total World. True. However, in general the more you split your portfolio the more likely you'll have opportunities to TLH. If the US goes up a...

To me this doesn't seem much different than enabling your adult self-supporting child to pay cheaper insurance rates by putting his car in your name and adding it to your policy. Scam the insurance company, or scam the IRS. Both are wrong. Just curious....do you feel the same about the parent who g...

I'm trying to decide whether the simplicity of Total World outweighs the benefit of tax loss harvesting. There is no reason you can't TLH even if you do use Total World. True. However, in general the more you split your portfolio the more likely you'll have opportunities to TLH. If the US goes up a...

If the donor had capital loss carryforwards - that benefitted him as $3,000 deductions in the 39.6% bracket If this were the case, wouldn't it be better to donate appreciated securities and take the deduction on Schedule A? In most cases it probably would. But how about if you want to gift the shar...

Isn't this part of the reason the kiddie tax was developed? I am sure you are right. But in my previous comment to Tom, I outlined at least two real-world situations where the donor would benefit by gifting shares to a child who nonetheless pays the full 15% rate. Am I missing anything here? I don'...

Wagnerjb, The cost basis of the gifted shares remains the same as it was for the original owner. However, if the recipient has a lower marginal tax bracket it may be more beneficial for the recipient than it would have been for the donor. Yes, I understand. If the donor was in AMT, then the child p...

Tax law is public knowledge and deductions are intended to be utilized. There is nothing that prevents OP from giving someone money and encouraging the other party to donate to charity. Correct. As long as OP understands that what he is doing is gifting daughter, and she is under no legal obligatio...

I rebalanced in February after I received a cash bonus and restricted shares vested (new money). Since then, I have not broken my bounds for rebalancing. I rebalanced to return to my desired Asset Allocation.

Best wishes.