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April 2021

The Capital Gains Conundrum

NOTE: This video was recorded prior to President Joe Biden's proposal to double the Capital Gains tax on individuals earning over $1,000,000 per year. Our view is unchanged.   With proposals to eliminate the capital gains tax for people earning over $400,000 a year, it leaves us with a conundrum. Should we deliberately be taking long-term capital gains at this point in time? Taxes are easy to manage, yet difficult to avoid. Typically strategies involve some combination of rescheduling strategies, such as: Roth conversions, tax-loss harvesting, holding onto gains so they're long-term, deferring gains indefinitely, qualified charitable distributions from an IRA, donor advised funds, charitable remainder trusts, and even more advanced strategies such as GRATs, trusts, investing in opportunity zones. And of course rebalancing at the household level instead of the account level can reduce turnover and reduce taxes. But in most of these examples we're managing taxes, not avoiding...
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