By |Published On: March 5th, 2015|Categories: Research Insights|

Our good friends at the government have compiled their newest list of tax-tricks that anger them the most.

Or in their words, how tax pros make the “Code Less Fair.”

I’m not sure what “fair” means, but let’s roll with it for our current discussion.

First, the source document:

tx

The Six Major Tax Strategies Identified Include:

  1. Using collars to avoid paying capital gains taxes
  2. Using wash sales to time the recognition of capital income
  3. Using derivatives to convert ordinary income to capital gains or convert capital losses to ordinary losses
  4. Using derivatives to avoid constructive ownership rules for partnership interests
  5. Using basket options to convert short-term gains into long-term gains
  6. Avoiding income taxes by deferring compensation

If you aren’t familiar with some of these tax-minimization techniques I encourage you to read the full report.

If you are engaged in any of these tax trades you probably want to keep an eye on lobbying efforts from the banks.

Good luck!

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About the Author: Wesley Gray, PhD

Wesley Gray, PhD
After serving as a Captain in the United States Marine Corps, Dr. Gray earned an MBA and a PhD in finance from the University of Chicago where he studied under Nobel Prize Winner Eugene Fama. Next, Wes took an academic job in his wife’s hometown of Philadelphia and worked as a finance professor at Drexel University. Dr. Gray’s interest in bridging the research gap between academia and industry led him to found Alpha Architect, an asset management firm dedicated to an impact mission of empowering investors through education. He is a contributor to multiple industry publications and regularly speaks to professional investor groups across the country. Wes has published multiple academic papers and four books, including Embedded (Naval Institute Press, 2009), Quantitative Value (Wiley, 2012), DIY Financial Advisor (Wiley, 2015), and Quantitative Momentum (Wiley, 2016). Dr. Gray currently resides in Palmas Del Mar Puerto Rico with his wife and three children. He recently finished the Leadville 100 ultramarathon race and promises to make better life decisions in the future.

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For informational and educational purposes only and should not be construed as specific investment, accounting, legal, or tax advice. Certain information is deemed to be reliable, but its accuracy and completeness cannot be guaranteed. Third party information may become outdated or otherwise superseded without notice.  Neither the Securities and Exchange Commission (SEC) nor any other federal or state agency has approved, determined the accuracy, or confirmed the adequacy of this article.

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