Tax Strategies

The strategic placement of different investment types across taxable and tax-advantaged accounts to minimize overall tax burden. Tax-inefficient investments (bonds, REITs, actively managed funds generating ordinary income or short-term capital gains) should be held in tax-advantaged accounts (Traditional IRA, 401(k), Roth IRA). Tax-efficient investments (stocks held long-term, index funds, municipal bonds) should be held in taxable brokerage accounts where qualified dividends and long-term capital gains receive preferential tax treatment.

Example: A client has $500,000 in a taxable brokerage account and $500,000 in a Traditional IRA. Optimal asse...

Tax-advantaged methods for philanthropic giving that maximize charitable impact while minimizing tax liability. Common strategies include donating appreciated securities (avoiding capital gains tax on appreciation), donor-advised funds (immediate tax deduction with flexible timing), charitable remainder trusts (income stream with future donation), and qualified charitable distributions from IRAs. Donating appreciated stock held over one year provides both a fair market value deduction and eliminates capital gains tax on the appreciation.

Example: A client holds stock purchased for $10,000 that is now worth $50,000 (held for 3 years). If they don...

Tax rule preventing income shifting by taxing a child's unearned income above $2,700 (2026) at the parent's marginal tax rate instead of the child's lower rate. Applies to a child under 18, and to an 18-year-old or a full-time student under 24 whose earned income does not exceed half of their own support, if a parent is alive at year-end and the child does not file a joint return. Only affects unearned income such as dividends, interest, and capital gains from custodial accounts (UGMA/UTMA), not earned income from employment.

Example: A 16-year-old has $8,000 in taxable bond interest from a UGMA account and $3,000 in wages from a par...

The process of transferring funds from a Traditional IRA, SEP IRA, SIMPLE IRA (after its 2-year initial participation period), or employer-sponsored retirement plan (401(k), 403(b)) to a Roth IRA, paying ordinary income tax on the converted pre-tax amount in the year of conversion. Since 2010, there are no income limits for conversions, making this strategy available to all taxpayers regardless of income level. Each conversion is subject to a separate 5-year holding period before converted amounts can be withdrawn penalty-free by an owner under age 59½. Conversions are irrevocable and cannot be recharacterized.

Example: A 55-year-old executive with $500,000 in a Traditional IRA expects to retire in a lower tax bracket....

Tax rule that resets cost basis of inherited assets to fair market value at date of death, eliminating capital gains tax on appreciation during decedent's lifetime. If the estate elects it, the alternate valuation date replaces the date of death. Heirs only pay tax on appreciation after inheritance. Does not apply to retirement accounts (IRAs, 401(k)s); distributions of pre-tax money and earnings from a traditional account remain taxable as ordinary income. Major estate planning benefit for highly appreciated assets.

Example: A mother purchased stock in 1980 for $10,000 that is now worth $500,000 at her death. Her son inheri...

A tax strategy of selling securities at a loss to offset capital gains and reduce tax liability. Realized losses can offset capital gains dollar-for-dollar, with up to $3,000 ($1,500 if married filing separately) of excess losses deductible against ordinary income annually. Subject to the wash sale rule, which disallows the loss if substantially identical securities are acquired within 30 days before or after the sale.

Example: An investor holds Stock A with a $10,000 unrealized loss and Stock B with a $15,000 unrealized gain....

Investment strategies designed to minimize tax drag on portfolio returns through asset location, tax-loss harvesting, holding period management, and low-turnover investing. Core approaches include placing tax-inefficient assets (bonds, REITs) in tax-advantaged accounts and tax-efficient assets (index funds, growth stocks) in taxable accounts, using long-term capital gains treatment, and avoiding unnecessary portfolio turnover. Effective implementation can improve after-tax returns; the size of the benefit depends on the investor's tax bracket, holdings and account types.

Example: An adviser recommends a client place high-yield bonds (generating ordinary income taxed up to 37%) i...