Your Wealth Reserve: Another way Wall Street helps wealthy avoid taxes

No one knows why the market is up

The market index is up over 7% so why do some advisors claim we are having a recession. Others think a new rally is not impossible. What does this mean for the middle class, for retirees, for Wall Street? When in doubt, do nothing. Trying to find the next market winners has never been successful. Following the latest technical charts has been mind-bending. Advisors must still make sales to keep their jobs so of course they must pitch something. Some will be successful in their guessing; others will not and we don’t know in advance. The bosses at my brokerage firm used to say “we need activity (securities either bought or sold) to make money. Go through your book.” One of the greatest investors, Warren Buffett, says “Our holding period is forever.” Lucky investors who follow his advice to use the Vanguard 500 Index fund are enjoying 9.5% over the last 5 years. Most advisors have not beaten that return history.

Control what you can control. https://www.amazon.com/Millionaire-Mutual-Funds-Save-taxes/dp/1534939490

Another way Wall Street helps wealthy avoid taxes

The wealthy sell their thousands of losing stocks in profitable companies to take the loss against their income to reduce taxes. Then they buy similar profitable companies back so they can take advantage of another round of this tax deduction trick in the future. Since they own thousands of the shares, they create big deductions for future tax benefits. Since 1921, claiming tax losses from so-called wash sales — selling shares of a company then buying them again within a short period — has been forbidden. But former MS chief Steve Ballmer collected his losses anyway because, technically, the types of shares he bought and sold weren’t the same. Both Shell and BHP offered two different versions of their common stock. For each company, the two stocks were legally distinct, but they performed very similarly because they were shares in the same company. Goldman Sachs, which conducted the trades on Ballmer’s behalf, used the stock market’s natural volatility to make this legal tax trick to help him cut taxes. ProPublica estimates that from 2014 through 2018, Ballmer was able to generate tax losses totaling $579 million without changing his investment portfolio in a meaningful way. The tax savings from these losses amount to at least $138 million. The data comes from the PP “The Secret IRS Files” series. Most of us with wage income cannot deduct more than $3,000, while the wealthy can easily deploy $100 million in capital “losses” to cancel out a $100 million gain from selling some of their vast holdings. Most of the wealthy can avoid taxes and run up the deficit for the rest of us to pay off.

Our alternative: https://www.amazon.com/New-American-Retirement-System-Reserve/dp/1461030072

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