Purchase Solution

Your aunt would like to minimize tax on investment income.

Not what you're looking for?

Ask Custom Question

Your aunt is in a high tax bracket and would like to minimize the tax burden of her investment portfolio. She is willing to buy and sell in order to maximize her after-tax return and she has asked for your advice. What would you suggest that she do?

Purchase this Solution
Solution Summary

The solution lists five strategies that could be employed by your aunt to minimize the total income tax on investments. All five are practical solutions to the problem without giving up her control of her assets. Following that discussion, there is a short paragraph suggesting a plan to discuss and identify whether any of the five strategies would fit her situation and temperment.

Solution Preview

Without knowing the age or amount of wealth of your aunt, some of the following ideas may not be appropriate for her:

1. She can invest a portion of her portfolio in tax free bonds. It is relatively easy to compare the tax free rate to the after tax rate of other investments including the effects of state income tax. Assuming she lives in a state with tax, and if she buys municipals issued within her state, she can possibly avoid both federal and state ...

Purchase this Solution
Free BrainMass Quizzes
Balance Sheet

The Fundamental Classified Balance Sheet. What to know to make it easy.

Situational Leadership

This quiz will help you better understand Situational Leadership and its theories.

Six Sigma for Process Improvement

A high level understanding of Six Sigma and what it is all about. This just gives you a glimpse of Six Sigma which entails more in-depth knowledge of processes and techniques.

Introduction to Finance

This quiz test introductory finance topics.

Understanding Management

This quiz will help you understand the dimensions of employee diversity as well as how to manage a culturally diverse workforce.

View More Free Quizzes
Related BrainMass Solutions

  • Your managing director asks if you can participate in a semi

    what I would say about each area: Minimize income tax: Clients can set up a 401K to minimize personal income tax.

  • Memorandum: Tax Efficient Financial Planning

    He would like you to send him, in memo form, the various types of vehicles that can be used by clients to reduce the various kinds if taxation.

  • Investing in 401K

    I can invest up to 7% of my income into the plan. My current income is US$45,000 per year, and I am in the 15% tax bracket. I'd like a spreadsheet that provides options for each of the following investment choices: 1%, 2%, 3%, 4%, 5%, 6%, and 7%.

  • Minimize taxes for individuals

    One strategy for doing this is to prepay some expenses like medical expenses to get the minimum deductible amount. Another strategy is to avoid being pushed into a higher tax bracket by reducing your retirement plan distribution.

  • Call and put options for aunt Jemima's EnCana stock

    Explain to your aunt how she can use the call options to hedge her portfolio against a further drop in EnCana share price. Your aunt has heard about payoff profiles from BNN (Business News Network) and would like to learn more about them.

  • Year-End Tax Planning Strategies

    267740 Year-End Tax Planning Strategies What are some year-end tax planning strategies you (personally) can employ to minimize your next year's tax liability? Here are a few, which may not apply to everyone: 1.

  • Tax Minimization Advice and 401(k)s

    130207 Tax Minimization Advice and 401(k)s I need to advise someone about contributing to an employer's 401(k) plan to save money for retirement. She wonders how much she would save on her income taxes by contributing to the plan.

  • Tax questions: wide variety of subjects

    Paul inherits stock from his Aunt Sadie that had a basis of $63,000 to Sadie and a fair market value of $54,000 on February 23, 2006, the date of her date. Paul sells the stock on June 21, 2006 for $58,000.

  • Tax benefits through 401(K) Plan

    His current income is US$50,000 per year, and he is in the 25% tax bracket. In a memo to your friend that outlines how much he would save in taxes by contributing to his 401(k) plan.

View More Related Solutions