Search found 355 matches

by Greenman72
Fri Oct 04, 2019 7:37 am
Forum: Investing - Theory, News & General
Topic: The wisdom of D&D plans [Deduction and Deferral]
Replies: 39
Views: 1761

Re: The wisdom of D&D plans [Deduction and Deferral]

[OT comment removed by moderator Flyer24] First, I said numerous times that the mathematical model has its faults, mostly because of its unrealistic nature. It was meant to provide a useful framework for quantifying the difference between taxable accounts and non-taxable ones. If you think it's a p...
by Greenman72
Thu Oct 03, 2019 5:53 pm
Forum: Investing - Theory, News & General
Topic: The wisdom of D&D plans [Deduction and Deferral]
Replies: 39
Views: 1761

Re: The wisdom of D&D plans [Deduction and Deferral]

If you really are a CPA, why don't you just include all the variables and generate a valid comparison? This "back of the envelope" is getting a bit silly.... Because, as I said, there are about 5000 different variables. Most of them are behavioral (not mathematical) in nature. And most of the purel...
by Greenman72
Thu Oct 03, 2019 5:49 pm
Forum: Investing - Theory, News & General
Topic: The wisdom of D&D plans [Deduction and Deferral]
Replies: 39
Views: 1761

Re: The wisdom of D&D plans [Deduction and Deferral]

petulant wrote:
Thu Oct 03, 2019 5:40 pm
No, no, no. This is blatantly self-serving. You have to include the tax savings from not paying income tax! And that completely trumps the taxable account.
That's built into the 7.2% vs. 6.5% rate of return. The extra .7% is the tax savings and is being compounded in the calculation.
by Greenman72
Thu Oct 03, 2019 5:47 pm
Forum: Investing - Theory, News & General
Topic: The wisdom of D&D plans [Deduction and Deferral]
Replies: 39
Views: 1761

Re: The wisdom of D&D plans

So basically, it sounds like you're agreeing with me. Until the IRA balances are either 100% taxable or 100% nontaxable, you really have to file an 8606 every year. For ever and ever. And yes--I charge AUM fees and financial planning fees and tax prep fees. Three different services, three different...
by Greenman72
Thu Oct 03, 2019 5:34 pm
Forum: Investing - Theory, News & General
Topic: The wisdom of D&D plans [Deduction and Deferral]
Replies: 39
Views: 1761

Re: The wisdom of D&D plans [Deduction and Deferral]

OK. As promised, here's my "back-of-the-envelope" calculation on D&D vs. Taxable. Invested in the aforementioned portfolio, it would have a 7.2% annual rate of return. Less the .7% expense ratio, it would have a 6.5% rate of return. Suppose that a person has $100k that they can put into a D&D plan. ...
by Greenman72
Thu Oct 03, 2019 3:18 pm
Forum: Investing - Theory, News & General
Topic: The wisdom of D&D plans [Deduction and Deferral]
Replies: 39
Views: 1761

Re: The wisdom of D&D plans

I'm assuming that IRD refers to "income with respect to the decedent", and Greenman's point is that if one does not keep up with basis (e.g. via 8606), then potential tax breaks might be lost (whether to the original taxpayer or their heirs). That is, there will be taxes due that would not have bee...
by Greenman72
Thu Oct 03, 2019 3:16 pm
Forum: Investing - Theory, News & General
Topic: The wisdom of D&D plans [Deduction and Deferral]
Replies: 39
Views: 1761

Re: The wisdom of D&D plans

Yet again, you did not address any of the issues that may cost the client far more than $5k over the course of their lifetime, such as IRD. (Do you even know what the term means? And the implications behind it?) Can you elaborate on how IRD can cost money? (and by IRD, do you mean the inheritor pay...
by Greenman72
Thu Oct 03, 2019 1:25 pm
Forum: Investing - Theory, News & General
Topic: The wisdom of D&D plans [Deduction and Deferral]
Replies: 39
Views: 1761

Re: The wisdom of D&D plans

Increased costs of tax compliance? There shouldn't be any. Taxable accounts are often more troublesome than tax-advantaged accounts. Strictly from a tax prep point of view.... I don't enter all the detail from a 1099-B. I lump all the LT covered together, the LT non-covered, etc. Then you have to e...
by Greenman72
Thu Oct 03, 2019 12:53 pm
Forum: Investing - Theory, News & General
Topic: The wisdom of D&D plans [Deduction and Deferral]
Replies: 39
Views: 1761

Re: The wisdom of D&D plans

So basically, it sounds like you're agreeing with me. Until the IRA balances are either 100% taxable or 100% nontaxable, you really have to file an 8606 every year. For ever and ever. And yes--I charge AUM fees and financial planning fees and tax prep fees. Three different services, three different ...
by Greenman72
Thu Oct 03, 2019 12:21 pm
Forum: Investing - Theory, News & General
Topic: The wisdom of D&D plans [Deduction and Deferral]
Replies: 39
Views: 1761

Re: The wisdom of D&D plans

(edit - directed at neurosphere) ^Yes, a Solo 401k is technically better, for the reasons you mention. However, in my experience, they're more difficult to set up and maintain. And once you get to $250k, you have to file a 5500. And the only real benefits are: 1. You don't have to include it in the ...
by Greenman72
Thu Oct 03, 2019 11:29 am
Forum: Investing - Theory, News & General
Topic: The wisdom of D&D plans [Deduction and Deferral]
Replies: 39
Views: 1761

Re: The wisdom of D&D plans

You both bring up good points. One thing I'd like to focus on is the "additional tax compliance" part. (Since I'm the CPA, and will actually be preparing the tax return) My solution - have Wife max out the 401k through her employer. Do a SEP for the husband. Get a JTWROS taxable account and fund it ...
by Greenman72
Thu Oct 03, 2019 10:15 am
Forum: Investing - Theory, News & General
Topic: The wisdom of D&D plans [Deduction and Deferral]
Replies: 39
Views: 1761

The wisdom of D&D plans [Deduction and Deferral]

(Disclosure - I'm a CPA/PFS and CFA. I own my own tax & personal financial advisory firm. Yes--I'm a financial advisor.) (Another note - I use the term "D&D plan" to refer to any qualified retirement plan where you get a deduction and a deferral. IRA, SEP, Simple, 457, 401k, 403b, Cash Balance, etc....
by Greenman72
Fri Aug 09, 2019 6:04 am
Forum: Investing - Theory, News & General
Topic: Tax Loss Harvesting Worth it?
Replies: 176
Views: 13988

Re: Tax Loss Harvesting Worth it?

...how about investments owned by a husband and investments owned by a wife, in their names only, in separate accounts. Then, husband sells at a loss and wife buys same exact investment in her individual account. Wash sale? Allowed by IRS? :confused The husband and wife are (presumably) one taxpaye...
by Greenman72
Thu Aug 08, 2019 8:34 am
Forum: Investing - Theory, News & General
Topic: Need help understanding Dividend and Capital Gains
Replies: 13
Views: 952

Re: Need help understanding Dividend and Capital Gains

The company pays $X a share. That’s what you would get. The yield is not a fundamental concept. The yield changes every day. The stock price (denominator in the yield calculation) changes moment by moment when the market is open. This is the way I see it, too. If a $50 stock has a $1.50 dividend, t...
by Greenman72
Thu Aug 08, 2019 8:20 am
Forum: Investing - Theory, News & General
Topic: Tax Loss Harvesting Worth it?
Replies: 176
Views: 13988

Re: Tax Loss Harvesting Worth it?

With regard to IRA's and 401k's - the law is clear. Per Pub 550 - "You cannot deduct losses from sales or trades of stock or securities in a wash sale...." In a tax-protected account, there is no loss to deduct, so there is no wash sale. You can be subject to the wash sale if you sell a stock in a t...
by Greenman72
Wed Aug 07, 2019 3:05 pm
Forum: Investing - Theory, News & General
Topic: Tax Loss Harvesting Worth it?
Replies: 176
Views: 13988

Re: Tax Loss Harvesting Worth it?

H-Town wrote:
Wed Aug 07, 2019 1:36 pm
When the subject matter is in the grey area, we just need to think about the potential cost and benefits for the client. Eliminate the grey area, eliminate the risk, and eliminate all tax benefits for your client, ensuring that they lose more money in taxes than is necessary.
FTFY
by Greenman72
Wed Aug 07, 2019 12:53 pm
Forum: Investing - Theory, News & General
Topic: Tax Loss Harvesting Worth it?
Replies: 176
Views: 13988

Re: Tax Loss Harvesting Worth it?

Letter of the law followed, spirit quite effectively violated. But that's not enough for some folks? You feel the need to risk violating the letter of the also? Why? A sense of adventure? An attitude that you should be able to claim a loss with absolutely no change whatsoever in your financial posi...
by Greenman72
Tue Aug 06, 2019 10:03 pm
Forum: Investing - Theory, News & General
Topic: Tax Loss Harvesting Worth it?
Replies: 176
Views: 13988

Re: Tax Loss Harvesting Worth it?

https://www.google.com/amp/s/www.market ... 2128040CF6

Read this (admittedly dated) article and tell me if IVV, VOO, and SPY are “substantially identical “.
by Greenman72
Mon Aug 05, 2019 9:07 am
Forum: Investing - Theory, News & General
Topic: Tax Loss Harvesting Worth it?
Replies: 176
Views: 13988

Re: Tax Loss Harvesting Worth it?

That's true. If we follow the intention of the Code, the same should be applied to 401k and employer sponsored plan. If that was the intention of the code why was the ruling so narrow when it could have been broader and said any retirement account? In ten years of practicing public accountancy and ...
by Greenman72
Thu Aug 01, 2019 12:36 pm
Forum: Investing - Theory, News & General
Topic: Are You Rich?
Replies: 31
Views: 3614

Re: Are You Rich?

Absolutely - incredibly rich - I've never had to worry about having a roof over my head or when my next meal will be. I've never had to worry about keeping warm. I own a car outright! I'm living better than 99% of people in history. If that's not rich, what is? +100000 I have a job that I love. I h...
by Greenman72
Mon Jul 29, 2019 5:09 pm
Forum: Investing - Theory, News & General
Topic: Why not aim for a HIGH YIELDING portfolio?
Replies: 60
Views: 5554

Re: Why not aim for a HIGH YIELDING portfolio?

If I wanted an annual income of $80,000 I'd need $4.2 million in a portfolio yielding 1.9%. But you'd only need $842,105 from a portfolio yielding 9.5%. Of course, you'd need to load up on high-yielding stocks and other high-yield assets that are reasonably safe/reliable. Don't a lot of retirees or...
by Greenman72
Mon Jul 29, 2019 9:25 am
Forum: Investing - Theory, News & General
Topic: ETF "Tax Efficiency" Quantified
Replies: 57
Views: 3786

Re: ETF "Tax Efficiency" Quantified

If there's a .5% capital gain distribution, and most people are in a 15% tax bracket (for LTCG), then the effective tax rate is .075%, or 7.5 basis points. So there you go. You're basically paying an additional 7.5 basis points per year for the privilege of being able to purchase fractional shares ...
by Greenman72
Tue Jul 23, 2019 5:15 pm
Forum: Investing - Theory, News & General
Topic: Tax Loss Harvesting Worth it?
Replies: 176
Views: 13988

Re: Tax Loss Harvesting Worth it?

As a side and serious question, is there any IRS penalty imposed on a tax preparer for recommending something later disallowed by the IRS? The taxpayer gets hit with the tax owed, plus interest and penalties, I suspect. :?: To be honest, I don't know what the penalties are. It has to be something p...
by Greenman72
Tue Jul 23, 2019 5:13 pm
Forum: Investing - Theory, News & General
Topic: Tax Loss Harvesting Worth it?
Replies: 176
Views: 13988

Re: Tax Loss Harvesting Worth it?

If you sold the Vanguard S&P 500 shares and bought the iShares S&P 500 shares, I would NOT consider that a wash sale. This is where I draw the line. If two funds track the same index, it's a direct violation against "substantially identical" language. Just because the IRS does not provide guidance,...
by Greenman72
Tue Jul 23, 2019 4:09 pm
Forum: Investing - Theory, News & General
Topic: ETF "Tax Efficiency" Quantified
Replies: 57
Views: 3786

Re: ETF "Tax Efficiency" Quantified

Regarding 2, it is very easy to calculate the difference. Take $1 million portfolios invested for 50 years. Portfolio A is in a mutual fund and Portfolio B is in the equivalent ETF. The mutual fund has 0.5% capital gain distributions (about what SWTSX) has each year. The remainder is reinvested aft...
by Greenman72
Tue Jul 23, 2019 8:00 am
Forum: Investing - Theory, News & General
Topic: ETF "Tax Efficiency" Quantified
Replies: 57
Views: 3786

Re: ETF "Tax Efficiency" Quantified

@Schooner, Thanks for the info. I was wondering what the "quantifiable" tax advantage was of an ETF rather than its mutual fund brother. Based on this, it sounds like having a mutual fund actually "costs" you about 12 basis points per year in capital gains tax. (125/10,000 = 1.25%, which is 12.5 bps...
by Greenman72
Mon Jul 22, 2019 9:45 pm
Forum: Investing - Theory, News & General
Topic: Tax Loss Harvesting Worth it?
Replies: 176
Views: 13988

Re: Tax Loss Harvesting Worth it?

Also, read the prospectuses of the major S&P 500 index funds. How many securities do they own? (hint - it’s not 500). How often do they reinvest/pay out dividends? Do they hypothecate shares or engage in other types of derivatives?

You might find out that they are more different than you think.
by Greenman72
Mon Jul 22, 2019 9:43 pm
Forum: Investing - Theory, News & General
Topic: Tax Loss Harvesting Worth it?
Replies: 176
Views: 13988

Re: Tax Loss Harvesting Worth it?

^Maybe so. But as a tax preparer, who should I advocate for? The IRS? Or the client? Unlike most people who want to pontificate obscure IRS rulings on an anonymous website, I actually have to face this very question on a near-daily basis. This is my job. Not a hobby. And that is what I have decided....
by Greenman72
Mon Jul 22, 2019 2:30 pm
Forum: Investing - Theory, News & General
Topic: Has DFA failed to innovate and keep up
Replies: 59
Views: 5625

Re: Has DFA failed to innovate and keep up

nedsaid wrote:
Mon Jul 22, 2019 1:51 pm
Yep, a lot of what looks good in theory gets lost in the implementation.
In theory, there's no difference between theory and reality.
In reality, there is.
by Greenman72
Mon Jul 22, 2019 2:29 pm
Forum: Investing - Theory, News & General
Topic: Tax Loss Harvesting Worth it?
Replies: 176
Views: 13988

Re: Tax Loss Harvesting Worth it?

For the record, don't feel bad about being confused. If you sat in a room with ten CPA's and asked them their opinion on this question, you would probably get ten different opinions. I know, because I WAS in the room (at a CPE event) last year when this question was asked, and it caused quite a deba...
by Greenman72
Mon Jul 22, 2019 1:41 pm
Forum: Investing - Theory, News & General
Topic: Tax Loss Harvesting Worth it?
Replies: 176
Views: 13988

Re: Tax Loss Harvesting Worth it?

I'm kind of curious, given that we have numerous comments on "vagueness" of the IRS to define a wash sale outside of identical single stocks, have we had any threads where someone claimed a loss on something like one S&P 500 index and then bought another, tried to report the first as a loss, and th...
by Greenman72
Mon Jul 22, 2019 1:16 pm
Forum: Investing - Theory, News & General
Topic: Tax Loss Harvesting Worth it?
Replies: 176
Views: 13988

Re: Tax Loss Harvesting Worth it?

Not sure. Jack Bogle never really recommended it that I am aware of. Believe it or not--Jack Bogle is not the only person in the world. There are other people in the world of personal finance and investing that have a lot of really smart things to say. IMHO - There's nothing wrong with TLH, but it'...
by Greenman72
Thu Jul 18, 2019 9:06 am
Forum: Personal Finance (Not Investing)
Topic: Just Bought an Annuity
Replies: 188
Views: 21631

Re: Just Bought an Annuity

Also, IOVA's are extremely useful for people who have large stashes of money that they know they will never use. (Yes--these people exist.) I have a client who makes about $2m per year in oil & gas royalties. He also has several million dollars in securities that he never ever plans to use--he just...
by Greenman72
Wed Jul 17, 2019 8:03 pm
Forum: Personal Finance (Not Investing)
Topic: Pass-Through S-corp, should I open solo 401k or SEP?
Replies: 3
Views: 439

Re: Pass-Through S-corp, should I open solo 401k or SEP?

Ultrashort version - the 401k is slightly better then the SEP. You can contribute more and it doesn’t have to get aggregated if you do a Roth conversion.

However, once you reach $250k in the 401k, you have an additional tax filing to do. It’s not difficult, but it’s one more thing to stay on top of.
by Greenman72
Tue May 28, 2019 4:49 pm
Forum: Personal Finance (Not Investing)
Topic: "Soft" question on student loans
Replies: 72
Views: 3401

Re: "Soft" question on student loans

There is no single correct formula for "financial parenting." Perhaps you are trying to impose your non-financial values upon clients who do not share the same values and that is frustrating you? This is possible. But it's less about "values" and more about "fungibility" and behavioral finance. Are...
by Greenman72
Tue May 28, 2019 1:20 pm
Forum: Personal Finance (Not Investing)
Topic: "Soft" question on student loans
Replies: 72
Views: 3401

Re: "Soft" question on student loans

Here's what a student loan really is: debt that, if you can't afford to pay it, will never go away unless you die, can't be bankrupted, can't be refinanced (as of a recent law change), and lenders will never, ever do an "offer in compromise" or similar negotiated deal and accept a reduced amount up...
by Greenman72
Tue May 28, 2019 9:58 am
Forum: Personal Finance (Not Investing)
Topic: "Soft" question on student loans
Replies: 72
Views: 3401

Re: "Soft" question on student loans

In my case I plan to pay for my kids university because I can afford to do both. For the vast majority of Americans, especially the financially illiterate ones, they'll be lucky if they can do either one. And please don't focus on the specifics of the example. It's just an anecdote that represents ...
by Greenman72
Tue May 28, 2019 9:20 am
Forum: Personal Finance (Not Investing)
Topic: "Soft" question on student loans
Replies: 72
Views: 3401

"Soft" question on student loans

In the very recent past, I have met with multiple clients who all say some variation of the same thing. The details differ somewhat, but the basic message is the same. "I bought my daughter a car and financed it. Later my daughter bought a house and she financed it. But when she went to college, I p...
by Greenman72
Wed May 22, 2019 8:37 am
Forum: Personal Finance (Not Investing)
Topic: I evaluated taking SS at age 62 versus age 70
Replies: 67
Views: 5596

Re: I evaluated taking SS at age 62 versus age 70

^+1.

Strange flex, but ok.

Actually, it's very easy to determine the optimal age to begin taking Social Security. All I need to know is what age you plan to die. If you provide that, I'll give you an exact answer.
by Greenman72
Wed May 15, 2019 7:44 pm
Forum: Personal Finance (Not Investing)
Topic: Benefits of becoming an independent contractor
Replies: 37
Views: 3410

Re: Benefits of becoming an independent contractor

^Contacting a professional is against our religion. I hope you get banned for even suggesting it.

How dare you suggest that a totally clueless person actually.....*gasp*....pay for help!?!?!?
by Greenman72
Wed May 15, 2019 2:29 pm
Forum: Personal Finance (Not Investing)
Topic: Benefits of becoming an independent contractor
Replies: 37
Views: 3410

Re: Benefits of becoming an independent contractor

or a "shareholder's meeting" in Vegas or Orlando. Aren't you a CPA. Come on, a shareholder's meeting for one shareholder??? Well, his wife could also be a shareholder. I would probably allow this, depending on how much money they made and how much the shareholder's meeting cost. If you made $500,00...
by Greenman72
Wed May 15, 2019 11:08 am
Forum: Personal Finance (Not Investing)
Topic: Benefits of becoming an independent contractor
Replies: 37
Views: 3410

Re: Benefits of becoming an independent contractor

Haven't read all the replies, but here is my ultrashort take on the matter: Assuming you have work to do, and won't starve....independent contractor is almost always better than employee. In fact, assuming that you're making enough to cover the additional costs of being a contractor (continuing ed, ...
by Greenman72
Wed May 15, 2019 9:21 am
Forum: Personal Finance (Not Investing)
Topic: Question on tax implications and what needs to be done
Replies: 22
Views: 1806

Re: Question on tax implications and what needs to be done

You should look carefully at the safe harbor rules which permit you to pay an amount equal to your 2018 tax in equal quarterly installments if your AGI was less than $150,000 or 110% of that amount if greater than $150,000. If you fall under those provisions you can then pay the balance in April 20...
by Greenman72
Tue May 14, 2019 10:44 am
Forum: Personal Finance (Not Investing)
Topic: Buying a "new" car - Advice pls
Replies: 76
Views: 7126

Re: Buying a "new" car - Advice pls

So essentially what you're saying is, if I plan on driving it that long or "until the wheels come off", I don't need to take into account its resale/salvage value or depreciation, correct? If you plan to drive it forever and ever and ever amen, and never ever ever plan to sell it, why would you car...
by Greenman72
Tue May 14, 2019 10:08 am
Forum: Personal Finance (Not Investing)
Topic: Buying a "new" car - Advice pls
Replies: 76
Views: 7126

Re: Buying a "new" car - Advice pls

Reminds me of my mom: She was debating getting a new (used) car. She asked the car salesman whether she should keep driving hers or buy a new one. (I told her never to ask a barber whether you need a haircut.) He told her, "It's better to sell a car for $1,000 than to wait until it's worthless. At l...
by Greenman72
Tue May 14, 2019 10:03 am
Forum: Personal Finance (Not Investing)
Topic: Buying a "new" car - Advice pls
Replies: 76
Views: 7126

Re: Buying a "new" car - Advice pls

Personally--in my experience, new cars cost a whole lot less than used cars, once you take into account all of the expenses associated with the car. I've owned many used cars that crapped out after 2-3 years, and usually had significant maintenance expenses associated with them. The only new car I'v...
by Greenman72
Tue May 14, 2019 6:28 am
Forum: Personal Finance (Not Investing)
Topic: How to Figure Payroll Taxes for S-Corp?
Replies: 22
Views: 1306

Re: How to Figure Payroll Taxes for S-Corp?

^ +1 to "there is no standard practice. Some do and some don't."

I know that there are CPA firms out there in the world that will still do payroll. But they will probably cost about the same (if not more) than a payroll company.
by Greenman72
Mon May 13, 2019 10:31 am
Forum: Personal Finance (Not Investing)
Topic: How to Figure Payroll Taxes for S-Corp?
Replies: 22
Views: 1306

Re: How to Figure Payroll Taxes for S-Corp?

I'm a CPA and I also do not do payroll.

My advice--cough up the money and pay for a payroll service, such as Paychex. Once you take into account the value of your time, you will realize that it costs a lot less than you think.
by Greenman72
Mon May 13, 2019 10:27 am
Forum: Personal Finance (Not Investing)
Topic: Leaving My CPA
Replies: 22
Views: 2638

Re: Leaving My CPA

I should add this--I'm a CPA. I work with a lot of CPA's. And rarely do I ever see CPA's giving advice. It's just not in their DNA. They record history and put it on a government-prescribed form. To the extent that you CAN get a CPA to give advice, it will be limited to 1.) this year, and 2.) what's...
by Greenman72
Mon May 13, 2019 10:14 am
Forum: Personal Finance (Not Investing)
Topic: Leaving My CPA
Replies: 22
Views: 2638

Re: Leaving My CPA

Hi I have had same CPA for last 20 years (My Brother) . He does my year end returns but does not offer any tax advice, tax loss harvesting , tax strategies. I asked him about NUA and he shrugged his shoulders. I provide him all my receipts and for $600 he files my taxes. I am of the mind to leave h...