Building Wealth During Coronavirus: Day 9 - Use This Crisis To Lower Your Tax Bill

March 25, 2020

It's said that a politician should "never let a good crisis go to waste". Right now the same is true for your portfolio. Don't let this historic moment go to waste with inaction and idle hands. Seize this for all it's worth, some of which should be to lower your tax bill.

Not exactly solid financial stewardship...

Massive market sell-offs create panic, fear and a roller coaster of emotions. This can lead investors to being susceptible to shortsighted and emotional decision making, often to the detriment of their long-term financial success. A clear example of this I witnessed was during the 2008 financial crisis when a broker was recommending clients sell stocks in order to "get them off the statement" so he wouldn't have to explain those positions to the client when the statements came out. Not exactly solid financial stewardship.

A prudent move you should consider right now is utilizing tax loss harvesting to hedge future tax bills. If you sell investments that are currently at a loss, you could utilize those losses to offset future profits. This can be particularly valuable for executives in high tax brackets and those with substantial anticipated future earnings. One word of warning on this, don't just sell indiscriminately like the broker I mentioned above. Be smart about the holdings you sell, first making sure you no longer want to own that position as an investment. Taxes are not the best first reason to sell an investment.

At Spurstone, we focus on tax smart solutions for executives in all aspects of their wealth. This means we're constantly developing and executing tax strategies all year, every year. Tax loss harvesting is just the tip of the iceberg.

Taxes are a silent wealth killer. I recommend you pay your fair share, but not a penny more.

If you'd like to learn more innovative ways to potentially limit executive's tax exposure, I'd enjoy hearing from you so connect with me here.

-Tim Golas, Partner @ Spurstone - Architects of Executive Wealth