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Wall Street Secrets for Tax-Efficient Investing: From Tax Pain to Investment Gain

ISBN: 978-1-57660-088-7
259 pages
November 2001
Wall Street Secrets for Tax-Efficient Investing: From Tax Pain to Investment Gain (1576600882) cover image


When looking at a monthly brokerage statement, an investor’s eyes go straight to the bottom line—the account value. But there’s a catch. If you have big gains and decide to play it safe and take some of that money off the table, taxes will take a hefty chunk of those profits. Brokerage firms know how to handle such risk for their own accounts, hedging holdings, for example, to iron out volatility instead of incurring taxable capital gains. Savvy individual investors can use the same techniques to protect themselves.

In this indispensable guide, Robert Gordon, a Wall Street veteran, shares the strategies of an insider to demonstrate how you can use the tax laws to your advantage. Written in plain English, this book explains federal and state tax considerations that investors need to know to make the most tax-efficient choices and to protect their portfolios. The emphasis is on practical application, aimed at guiding you to specific, accessible tax-saving goals without having to wrestle down the entire Internal Revenue Code.

Thanks to the talents of Gordon and respected journalist Jan M. Rosen, this book is clearly organized along transactional lines, offering easy entry for busy readers and allowing investors to zero in on a powerful array of proven, tax-minimizing techniques and strategies. By the time you finish reading Wall Street Secrets for Tax-Efficient Investing, you will be on your way to reducing your tax bite to a nibble and enjoying the full benefit of your investment earnings.
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Table of Contents

Table of Contents viii

List of Illustrations xv

Preface xvi

Overview 1

Part 1: Taxable Investments and Strategies for Protecting Their Value

1 Choosing your Investment Tools Carefully 13

2 The How and When of Harvesting Your Losses 27

3 Techniques for Utilizing your Losses 39

4 Smart Choices for Fixed-Income Holdings 47

5 Hedging to Avoid Capital Gains Tax 55

6 The Quest for Tax Efficiency in Mutual Funds 75

Part 2: Tax-Advantaged Investment Opportunities

7 Structuring Your Retirement Portfolio 95

8 Savvy Ways to Save for College 113

9 The Double Life of Life Insurance 129

Part 3: Special Situations

10 Making Prudent Elections 143

11 Managing Your Employee Stock Options 157

12 Avoiding Tax Traps for Closely Held Businesses 167

13 Planning for Often-Overlooked State Taxes 177

Part 4 Your Annual Opportunity

14 Year-End Planning Strategies 201

Appendix 1: Historical Tax Rates 217

Appendix 2: Key Points for Investors from the 2001 Tax Act 221

Notes 227

Glossary 229

Index 250

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Author Information

Robert N. Gordon is the president and owner of Twenty-First Securities Corporation, which provides investment advice and financial management for corporate, institutional, and individual clients. He was formerly a partner at Oppenheimer & Company and chairman of the Securities Industry Associations Tax Policy Committee. He is also an adjunct professor at New York Universitys Graduate School of Business and is a much sought-after speaker at industry conferences.

Jan M. Rosen, a long-time editor and former tax columnist in the financial news department of The New York Times, has been responsible for that newspapers annual tax section for many years. In addition, she is a contributor to Tax Hotline and other newsletters published by Boardroom, Inc.
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“Bob Gordon and Jan Rosen know that it’s what you keep rather than how much you earn that really counts. This book provides an easy-to-read-and-remember menu of tax-minimizing techniques and strategies. Every taxpayer should have a copy as a guide in the never-ending joust with the revenue codes.”
Robert H. Stovall, CFA
Senior Vice President and Market Strategist, Prudential Financial

“Understanding the growing range of tax-efficient investing alternatives is no longer an optionit’s a critical element of sound financial planning. This book is an essential tool for grasping and maximizing today’s rapidly expanding menu of innovative investment choices.”
Peter Quick
President, American Stock Exchange

“If you hate taxes, you’ll love this book! Authors Robert Gordon and Jan Rosen reveal a catalogue of tax-cutting strategies for taxpayers and investors.”
Ed Slott, CPA
Editor, Ed Slotty’s IRA Advisor

“A book every investor should have on his desk—a very valuable guide to minimizing tax on all kinds of investments, from retirement plans to college savings to swap contracts.”
Martin Edelston
Publisher, Bottom Line/Personal
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