You’ve made great stock selections – congratulations! Now comes that hard part for taxable portfolios. How do you manage taking gains and their associated tax impact? First you need to understand the potential tax impact.
Do the prep.
The list below is not intended to be all-inclusive or specific for all of your clients, but identifying the following numbers can be a beneficial step in preparing to calculate a client’s after-tax return with regards to Federal Income Tax.
Do the math.
Once you’ve done your prep work, it’s a pretty simple calculation to determine a rough estimate of the after-tax return. Just follow these steps:
Note: This is a rough rule of thumb regarding the potential tax impact of a sale. If the taxpayer qualifies for the Alternative Minimum Tax, results may vary. The client’s tax advisor should be contacted to determine the actual impact for a particular client.
Is all turnover bad? Not necessarily. Just know what you’re getting into. Sometimes it may even make sense to generate turnover in order to harvest losses for tax purposes.
This content contains link(s) to an outside website. The link(s) may contain information concerning investments other than those offered by Russell Investment Group, its affiliates, subsidiaries, or distribution channels. Neither Russell Investment Group nor its affiliates are responsible for investment decisions made with respect to such investments or for the accuracy or completeness of information about such investments. The material available on this site has been produced by independent providers that are not affiliated with Russell Investment Group. Descriptions of, references to, or links to products or publications within any linked web site does not imply endorsement of that product or publication by Russell Investment Group. Any opinions or recommendations expressed are solely those of the independent providers and are not the opinions or recommendations of Russell Investment Group, which is not responsible for any inaccuracies or errors.