Tax optimization strategies for maximum impact

Most investors want help reducing their taxes. That’s especially true among the wealthiest, according to a recent study.*

While many clients think about tax planning on a year-to-year basis, you know that a strategic approach that spans multiple years is a powerful way to amplify the benefits of tax optimization. By taking a multiyear view, you can not only identify the most tax-efficient strategy to achieve a specific financial objective, but also the best time to implement it – maximizing available tax savings.

Tax optimization strategies

• Tax-loss harvesting – Use losses to offset realized taxable gains and even ordinary income. While harvesting losses from individual securities can be effective, combining the technique with separately managed accounts and direct indexing strategies may provide increased efficiencies of both time and resources.
• Estate planning – Clients with net worth below the $15 million lifetime exclusion for estate and gift taxes can leverage the stepped-up cost basis afforded to heirs on assets in an estate.
• Small business re-structure – Clients who own S-corporation businesses may want to consider converting to C-corporations to take advantage of the qualified business income (QBI) deduction of up to 20% of business income available to pass-through entities.
• 1031 UPREIT programs – Accredited investors looking to dispose of investment property may be able to defer taxes on gains while maintaining many of the benefits associated with owning real estate.
• Roth IRA conversion - Converting a traditional IRA to a Roth IRA may result in a hefty one-time tax bill in the year of conversion, but results in savings that can continue to grow tax-free. Help clients decide when to take the tax hit
• Incentive stock options - Clients who exercise incentive stock options may be at higher risk of triggering the alternative minimum tax (AMT). Help clients determine the optimal time to exercise options in light of their liquidity needs, expectations for the stock price and potential tax implications over the next few years.