Wealth Building Strategies

Capital Gains Tax Changes Would Impact Millions

KEY POINTS
  • Wealthy families could face combined tax rates of as much as 61% on inherited wealth under President Joe Biden’s tax plan, according to a recent analysis.
  • Biden’s plan proposes to nearly double the top tax rate on capital gains and eliminate a tax benefit on appreciated assets known as the “step-up in basis.”
  • The combined tax rate would be the highest in nearly a century, according to the tax policy research group.

Wealthy families could face combined tax rates of as much as 61% on inherited wealth under President Joe Biden’s tax plan, according to a recent analysis and tax accountants.

As part of his American Families Plan, Biden is proposing to nearly double the top tax rate on capital gains and eliminate a tax benefit on appreciated assets known as the “step-up in basis.” Combining the estate tax, the new higher capital gains rate and the repeal of step-up in basis could bring total effective marginal rates as high as 61%, according to an analysis from the Tax Foundation.

The rate would be the highest such rate in nearly a century, according to the tax policy research group.

“It’s a big number,” said Brad Sprong, KPMG partner and private enterprise tax leader. “That’s why we’re telling our clients to be smart and start preparing now.”

It’s unclear whether Biden’s plan can pass Congress, even with changes. Many moderate Democrats are likely to push back against his proposal to raise the capital gains rate to 39.6% as well as the plan to eliminate the step-up. What’s more, only a small number of the wealthiest taxpayers would ever face a rate of 61%. Many others would look to avoid it through tax and estate planning.

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How Delaware became the sexiest place in America to incorporate a company

 

Nearly 1.5m companies are incorporated in Delaware. How did this tiny state become a mecca for corporate activity?

Take a look at any given corporation’s registration docs, and there’s a good shot you’ll see the address 1209 North Orange Street.

Spanning less than a city block in Wilmington, Delaware, this nondescript office building is the official incorporation address of 285k+ companies from all over the world.

On the surface, there’s no reason that Delaware — home to blue hens and Civil War monuments — should be a corporate paradise. It’s the second smallest state in America, and the 6th least populous, with just 986k residents.

Yet, nearly 1.5m businesses from all over the world are incorporated there, including 68% of all Fortune 500 firms.

The Delaware Loophole and how it works

 

 

 

What to Look for When Choosing the Best Mortgage Investment Funds

Similar to choosing “the best” vacation, finding “the best” mortgage investment fund is subjective, and what might work for you will not work for another. However, there are some fundamentals that are vital to selecting a mortgage investment fund regardless of your preferences and risk tolerance. Here are three key concepts to understand to help you find the best mortgage fund for you. Click here to read more.

Why Invest in Mortgage Investment Funds?

Mortgage Investment Funds were created by the Canadian government in 1973 as part of the Residential Mortgage Financing Act to address what was believed to be an imminent housing crisis due to a lack of financing for home ownership and construction. These entities pool funds from investors to finance the purchase and construction of Canadian real estate.

Typically charging higher rates than conventional lenders, the earnings are redistributed back to the investors. But the investors that were candidates to participate back then were likely not attracted to the returns as term deposits at that time already had solid yields.

Lower interest rates have negatively impacted the income investors can earn through GICs and other fixed income products. With the uncertainty and volatility of the stock market, many investors are jittery there, too. Thus, to some people it comes as no surprise that in the past decade, Mortgage Investment Funds surged in popularity. What exactly are these investment entities, and what is drawing so many investors to participate in these opportunities? Click to read full article.

How Society Implodes

“Close your eyes and imagine this scenario: A child is taught that his country is racist, imperialist, evil, bigoted. The same child is also taught that science is white supremacy and that we must decolonize knowledge.
He is also taught that capitalism is rape. He is also taught that “fixed binaries” defining biological sex is antiquated science. He is also taught that national borders are racist. He is also taught that meritocracy is white supremacy. He is also taught that my truth is more important than THE truth. And that’s only day 1 of kindergarten.”

Gad Saad, Concordia University

A Guide to Relative Valuation

What is ‘relative valuation’?

Relative valuation is the notion of comparing the price of a company to the market value of similar companies.

To do this we need to use relevant multiples (P/E, EV/SALES, EV/EBITDA, etc.).

The multiples used in a relative valuation model must be a relevant proxy for a company’s value. For example, we cannot compare the average age of employees of different companies to determine their value, that would make no sense. We need to use metrics that are directly associated with a company’s intrinsic value, such as: sales, market cap, net income, and many others. Also, the companies we are comparing MUST BE RELATED in terms of industry and business operations.

For example, you cannot compare CloudMD or WELL Health Technologies to a cannabis company or a gold mining company. That is the same as comparing apples to oranges and your analysis would be useless…CLICK for complete article