this issue we discuss last minute tax tips, active
vs. passive investing and estate planning.
one likes owing the IRS, but it gets even more
scary when you recieve that certified letter in
the mail stating you underpaid by a significant
amount. One of the biggest culprits is failure
to list the cost basis of each security sold on
your 1040. The IRS only recieves the "sell"
amount of the transaction from the 1099's, so
by default if you don't tell the IRS what you
paid for the stock they assume it is all profit.
often happens with Employee stock purchase plans
or Employee Stock Option accounts. Make sure you
don't overlook these reportable transactions on
your return. More than likely the custodian withheld
the standard 20% federal taxes on the gain, but
you still need to report to the IRS your cost
vs. Passive Investing:
investing world is divided into two camps: those
that believe in Active investing strategies vs.
the Passive or indexing followers.
management is the belief that the right fund managers
can outperform their benchmarks. The Active crowd
believes that the markets are inefficient and
that securities can become mispriced.
management is the belief that overtime the indexes
always trump active strategies. The indexers believe
that the markets are more efficient and that a
low cost index strategy fund wins out over most
actively managed funds.
see value in both strategies and believe a combination
can work to most clients advantage. My case for
Active strategies is that I believe that the markets
can at times be very inefficient (remember we
are talking about extreme human emotions at play:
greed and fear). In trending markets an indexing
approach seems to work fine, in a volatile or
choppy market it helps to have a more active bias.
Probate: For those with realestate in more than
one state (outside your state of residence), you
should talk with your estate attorney regarding
ways to avoid ancillary probate.
When you die your Will is probated in your state
of residence. For each state you own property
in (outside your state of residence) your family
will have to endure the expense of another probate.
One often overlooked item that causes problems
is Time Shares. If you have a time share ownership
in Florida, Mexico or any other tropical location
it could cause your family some added expense
once you pass away. There are ways to avoid this
and your estate attorney can show you how.