Presentation Transcript

1. INVESTMENT TAXATION INVESTMENT TAXATION
2. GOOGLE INC. $ 40,000 Selling Price $ 10,000 Purchase Price Cost Basis / Tax Basis = $10,000 or previously taxed dollars = $ 30,000 Capital Gain dollars not taxed on the sell, withdrawal or liquidation of a capital asset BIG BANK SAVINGS ACCOUNT $ 20,000 Withdrawal $ 10,000 Deposits Cost Basis / Tax Basis = $20,000 $ 10,000 Interest $ - 0 - Capital Gain INVESTMENT TAXATION
3. GOOGLE INC. $ 40,000 Selling Price $ 10,000 Purchase Price Cost Basis / Tax Basis = $10,000 = previously taxed dollars $ 30,000 Reportable Capital Gain or dollars not taxed BIG BANK SAVINGS ACCOUNT on the sell , withdrawal or liquidation of a capital asset $ 28,000 Withdrawal $ 10,000 Deposits Cost Basis / Tax Basis = $20,000 $ 18,000 Interest $ - 0 - Reportable Gain on Withdrawal MUTUAL FUND INC. $ 70,000 Liquidation $ 10,000 Investments Cost Basis / Tax Basis = $30,000 $ 5,000 Dividends $ 15,000 Capital Gains Distributions $ 40,000 Reportable Gain INVESTMENT TAXATION
4. Savings Account / CD Municipal Bond Bond Stock Mutual Fund Annuity IRA / 401(k) Roth IRA 401(k) HSA Life Insurance INCOME - 401(k) Contributions + Wages + Interest + Dividends + Capital Gain Income + IRA Distributions + 401(k) Distributions + Annuity Distributions + Real Estate Income ADJUSTMENTS - HSA Contributions - SEP Contributions - IRA Contributions Health Savings Account - Itemized Deductions S.E.P. Contributions - Personal Exemptions I.R.A. Contributions = Taxable Income INVESTMENT TAXATION
5. Savings Account / CD Municipal Bond Bond Stock Mutual Fund Annuity IRA / 401(k) Roth IRA 401(k) HSA Life Insurance Savings Account /CD $30,000 $5,000 Interest - Ordinary Inc $25,000 Contribution - Ordinary Inc Black Border = Ordinary Income Taxed White Border = Capital Gains Taxed No Border = Hasn’t Been Taxed Tax on Withdrawal $0 INVESTMENT TAXATION
6. Savings Account / CD Municipal Bond Bond Stock Mutual Fund Annuity IRA / 401(k) Roth IRA 401(k) HSA Life Insurance Municipal Bond $50,000 Unrealized Gain $20,000 $5,000 Interest - Tax Exempt $25,000 Contribution - Ordinary Inc Black Border = Ordinary Income Taxed White Border = Capital Gains Taxed No Border = Hasn’t Been Taxed Tax on Liquidation $20,000 Capital Gain INVESTMENT TAXATION
7. Savings Account / CD Municipal Bond Bond Stock Mutual Fund Annuity IRA / 401(k) Roth IRA 401(k) HSA Life Insurance Bond $50,000 Unrealized Gain $20,000 $5,000 Interest - Ordinary Inc $25,000 Contribution - Ordinary Inc Black Border = Ordinary Income Taxed White Border = Capital Gains Taxed No Border = Hasn’t Been Taxed Tax on Liquidation $20,000 Capital Gain INVESTMENT TAXATION
8. Savings Account / CD Municipal Bond Bond Stock Mutual Fund Annuity IRA / 401(k) Roth IRA 401(k) HSA Life Insurance Stock $55,000 Unrealized Gain $20,000 $10,000 Dividend - Cap Gain $25,000 Contribution - Ordinary Inc Black Border = Ordinary Income Taxed White Border = Capital Gains Taxed No Border = Hasn’t Been Taxed Tax on Liquidation $20,000 Capital Gain INVESTMENT TAXATION
9. Savings Account / CD Municipal Bond Bond Stock Mutual Fund Annuity IRA / 401(k) Roth IRA 401(k) HSA Life Insurance Mutual Fund $75,000 Unrealized Gain $20,000 $15,000 Cap Gain Dist - Cap Gain $10,000 Dividend - Cap Gain $5,000 Interest - Ordinary Inc $25,000 Contribution - Ordinary Inc Black Border = Ordinary Income Taxed White Border = Capital Gains Taxed No Border = Hasn’t Been Taxed Tax on Liquidation $20,000 Capital Gain INVESTMENT TAXATION
10. Savings Account / CD Municipal Bond Bond Stock Mutual Fund Annuity IRA / 401(k) Roth IRA 401(k) HSA Life Insurance Annuity $75,000 Unrealized Gain $20,000 $15,000 Cap Gain Dist $10,000 Dividend $5,000 Interest $25,000 Contribution - Ordinary Inc Black Border = Ordinary Income Taxed White Border = Capital Gains Taxed No Border = Hasn’t Been Taxed Tax on Liquidation $50,000 Ordinary Income INVESTMENT TAXATION
11. Savings Account / CD Municipal Bond Bond Stock Mutual Fund Annuity IRA / 401(k) Roth IRA 401(k) HSA Life Insurance IRA / 401(k) $75,000 Unrealized Gain $20,000 $15,000 Cap Gain Dist $10,000 Dividend $5,000 Interest $25,000 Contribution Black Border = Ordinary Income Taxed White Border = Capital Gains Taxed No Border = Hasn’t Been Taxed Tax on Liquidation $75,000 Ordinary Income INVESTMENT TAXATION
12. Savings Account / CD Municipal Bond Bond Stock Mutual Fund Annuity IRA / 401(k) Roth IRA 401(k) HSA Life Insurance Roth IRA 401(k) $75,000 Unrealized Gain $20,000 $15,000 Cap Gain Dist $10,000 Dividend $5,000 Interest $25,000 Contribution - Ordinary Inc Black Border = Ordinary Income Taxed White Border = Capital Gains Taxed No Border = Hasn’t Been Taxed Tax on Liquidation $0 INVESTMENT TAXATION
13. Savings Account / CD Municipal Bond Bond Stock Mutual Fund Annuity IRA / 401(k) Roth IRA 401(k) HSA Life Insurance HSA $75,000 Unrealized Gain $20,000 $15,000 Cap Gain Dist $10,000 Dividend $5,000 Interest $25,000 Contribution Black Border = Ordinary Income Taxed White Border = Capital Gains Taxed No Border = Hasn’t Been Taxed Tax on Liquidation $0 If Qualified Medical Expense $75,000 Ordinary Income INVESTMENT TAXATION
14. Savings Account / CD Municipal Bond Bond Stock Mutual Fund Annuity IRA / 401(k) Roth IRA 401(k) HSA Life Insurance Life Insurance $75,000 Unrealized Gain $20,000 $15,000 Cap Gain Dist $10,000 Dividend $5,000 Interest $25,000 Contribution - Ordinary Inc Black Border = Ordinary Income Taxed White Border = Capital Gains Taxed No Border = Hasn’t Been Taxed Tax on Liquidation $0 If Borrowed From Cash Value $50,000 If Withdrawn - Ordinary Income INVESTMENT TAXATION
15. INCOME + Wages + Interest Municipal Bond Interest + Dividends + Capital Gain Income + IRA Distributions + 401(k) Distributions + Annuity Distributions + Real Estate Income ADJUSTMENTS - HSA Contributions - SEP Contributions - IRA Contributions Black Border = Ordinary Income Taxed White Border = Capital Gains Taxed No Border = Hasn’t Been Taxed ADJUSTED GROSS INCOME - Itemized or Standard Deductions - Personal Exemptions = TAXABLE INCOME INVESTMENT TAXATION
16. INCOME +-ADJUSTMENTS =AGI - Deductions - Personal Exemptions = TAXABLE INCOME Stocks / Bonds / Savings Accounts / Certificates of Deposit / Mutual Funds Taxed in year earned After tax dollars Interest & Dividend – ordinary income tax rates Taxed as Capital Gain Capital Gains – capital gains tax rates After tax dollars Municipal Bonds Tax exempt Taxed as Capital Gain Traditional IRA and 401k Pre-tax dollars Tax deferred Taxed as Ordinary Income ROTH IRA and ROTH equivalent 401k After tax dollars No tax on withdrawal No tax on withdrawal Tax exempt if used for qualified medical expenses Tax exempt if used for qualified medical expenses Pre-tax dollars (no federal, state, or FICA tax) Health Savings Accounts (HSA) Tax deferred if used for non-medical expenses – taxed as ordinary income Tax deferred if used for non-medical expenses - taxed as ordinary income Annuity After tax dollars Tax deferred Taxed as Ordinary Income Tax exempt if borrowed from policy Tax exempt if borrowed from policy Life Insurance Investment After tax dollars Tax deferred - if withdrawn taxed as ordinary income Tax deferred - if withdrawn taxed as ordinary income