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Tax Planning

We are up-to-date on all of the changes to the current tax law, and make suggestions to take advantage of the new and the existing tax law.  Too often the investment community focuses on the pre-tax return of investments, while ignoring the taxability of different types of investments.  However, it's the after-tax return that determines what is directly deposited to your bank account.  A simple example of pre-tax versus after-tax return can be illustrated by comparing a capital asset held for more than a year, to one that is held for less than a year and as a result, is subject to ordinary income tax rates.  For example, an investment that yields 10%  that is taxable as ordinary income at 35%, earns less after taxes than a capital asset with the same yield that is taxed at 15%.  See the calculation below. 

                                         Ordinary income asset          Capital asset

Before-tax yield                          10.0%                                 10.0%

Tax reduction                                3.5%                                  1.5%

After-tax yield                               6.5%                                   8.5%


For that reason, we always focus on the after-tax return of investments.