Our weekly roundup of tax-related investment strategies and news your clients may be thinking about.
Clients should understand tax rules for some exchange-traded funds in taxable accounts because taxes for these funds can be tricky, according to MarketWatch. The specific rules on precious-metal ETFs, other commodity ETFs, foreign-currency ETFs and fixed-income ETFs are discussed. -- MarketWatch
Investors should be more careful of their investments in passive foreign investment companies such as mutual funds and partnerships because tax rates may cost more than 30%, according to the Motley Fool. Dividends, interest payments, and undistributed income from these assets are generally taxed with the ordinary income tax rate. An investor may need assistance from a savvy tax pro with the complicated Form 8621 when reporting PFIC investments to the Internal Revenue Service. -- Motley Fool
Tax planning for the transfer of a business to an unrelated party can become complex and may need a minimum two or three years of planning time, according to Forbes. Payment terms can be made in installments and the IRS taxes the seller on the proportional gain at the time the payment was received. The tax burden can be reduced up to 75% if the installment sale is coupled to a trust. This trust is of a different structure compared to the type of trust used when a business is sold to a family member. -- Forbes
Simulations show that investments placed in 529 plans can give better results compared to money invested on mutual funds, according to Morningstar. They offer significant tax savings by avoiding capital gains taxes, especially when they are used to pay for college expenses. Moreover, some states offer additional incentives, often allowing residents to deduct some or all of their 529 contributions from their taxable state income. -- Morningstar
Register or login for access to this item and much more
All Financial Planning content is archived after seven days.
Community members receive:
- All recent and archived articles
- Conference offers and updates
- A full menu of enewsletter options
- Web seminars, white papers, ebooks
Already have an account? Log In
Don't have an account? Register for Free Unlimited Access