TaxStrategy News & Analysis
4 articles
Market Mood
Family Offices Revisit Lender Model Tax Strategy for Potential Savings
More wealthy families are revisiting a tax strategy called the Lender model to generate investment expense deductions. This strategy gained attention after a 2017 Tax Court case involving the family behind Lender's Bagels established a pathway for family offices to deduct investment expenses if they operate as a trade or business. This was significant because the 2017 Tax Cuts and Jobs Act temporarily suspended miscellaneous itemized deductions. With the One Big Beautiful Bill Act making this suspension permanent, family offices have renewed interest in the Lender model. However, qualifying as a bona fide asset-management business requires significant operational changes, such as hiring more employees and restructuring management. This can create tension within families because not all members may share ownership or bear investment outcomes equally. Joseph Medina, a CPA at EY, noted that typically at least $300 million in investable assets are needed to justify the infrastructure costs to benefit from the Lender model. Family offices that focus more on services than investments may not qualify. The specifics depend on each office's unique facts and circumstances. The Lender ruling serves as guidance rather than a strict template for other family offices. This matters because the tax strategy can lead to meaningful expense savings for qualifying family offices. However, substantial operational changes and familial implications mean families must carefully weigh the costs and benefits before adopting the model.
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Roth Conversions: Few People Do Them, Assess Your Tax Strategy
The article discusses Roth conversions, highlighting that only a small number of people actually perform these conversions despite considerable attention to the topic. It emphasizes the importance of doing personal calculations to determine if a Roth conversion is the right tax strategy for an individual's retirement plans. The key message is that Roth conversions may not be suitable for everyone, and investors should not feel pressured by the fear of missing out (FOMO) to undertake them. The article does not provide specific figures or data on conversion rates or tax impacts but advises retirees to evaluate their own scenarios carefully. It stresses individual analysis rather than following popular trends. The absence of detailed numbers means the focus is on understanding Roth conversions as a complex financial decision rather than a broadly applicable recommendation. This matters to ordinary investors because it advises caution and personalized financial planning instead of adopting a one-size-fits-all approach to tax strategies in retirement. It calls for thorough calculation and consideration before proceeding with Roth conversions, which can affect tax liabilities and retirement income planning.
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Affiliated Managers earnings up next amidst tax strategy scrutiny
Affiliated Managers Group is set to report its earnings soon while facing scrutiny over its tax strategy. The outcome could impact the company's financial position and investor sentiment. This scrutiny is particularly relevant given recent regulatory focus on corporate tax practices. Investors should watch closely as the earnings report may influence market perceptions and stock performance for Affiliated Managers (AMG).
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Stock Gains Without Taxes: Major Wall Street Trade Insights
A new trading strategy on Wall Street allows investors to gain from stocks without facing immediate tax liabilities. This method involves using tax loss harvesting to offset gains, which can significantly enhance return on investment. The procedure helps in maintaining cash flow while optimizing portfolios. Such strategies may attract more investors looking to maximize their tax efficiency in volatile markets, impacting overall trading volumes and market dynamics.
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