With Spring, Comes Tax Time!

By Scott Smith, CIMA®

Tennessee Hall income tax includes mutual fund capital gain distributions

spring into tax seasonIt’s that time of the year to welcome spring, but with it comes tax time. Hopefully by now you have already completed your taxes. I have been doing my personal taxes on my own since I filed my first tax return years ago. This year was the first year I filed electronically via Intuit’s Turbo Tax software and I would highly recommend it for its ease of use, low cost, and time savings. Since all the information is saved, filing next year’s return should save even more time. This month’s letter will focus first on the Tennessee Hall Tax and then proceed into a discussion on tax efficient investing.

Overall, Tennessee is a tax-friendly state, with no state income tax and an inheritance tax that has a $5,000,000 exemption for 2015 and is scheduled to go away in 2016. There is one tax that bothers some of our clients around this time of year and that is the Tennessee Hall income tax. Established in 1929, the Hall income tax was named after Frank S. Hall, who was the state senator who sponsored the legislation. The intent of the bill was to apply a tax that state and local governments could use to raise money on intangible forms of property, like stocks and bonds. This was meant to supplement tangible property tax that residents were paying on the local level of government. For every dollar of Hall Income Tax that is paid, 37.5 cents comes back to the local level.

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Our Gambling Culture

The craving for immediate gratification has spread well beyond Wall Street.

April 2015 | by Laurence Fink, chairman and CEO of BlackRock

Retirement gambling CultureWe tend to speak of short-termism as though it’s a problem that only afflicts investors or corporate leaders, but that’s not the case. Short-term thinking pervades our most important institutions, from government to households. We’ve created a gambling culture in which we tune out everything except the most immediate outcomes. If we’re going to meet our commitments to our children and grandchildren, and to society as a whole, we need to open up the lens and start taking a more responsible, longer-term view of the challenges we face.

There’s a host of reasons short-termism has taken hold in our culture, both in the United States and more broadly. Greed and the media’s reliance on daily bombardments of bad news certainly play a part, but more important, we’ve lost sight of our actual goals. It’s in everyone’s interest to provide opportunities for education, a reasonable level of healthcare, and a secure retirement for the most people possible, just as we should all be working to conserve our natural resources to assure that clean air, clean water, and renewable fuel sources are available to our children.

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Is Gold a Gleaming Investment?

by Scott Smith, CIMA®

Is Gold a Gleaming InvestmentA couple blog posts back, I mentioned the historic low interest rates occurring in synchrony around the globe and highlighted a few takeaways for investors. In light of this unusual environment where global central banks are following the same strategy of printing money, buying bonds, lowering interest rates, and devaluing their currency, I think it’s a good time to discuss gold and the role it should play in client portfolios. Is Gold a Gleaming Investment?

Our bias will always be owning reasonably-priced productive assets, like stocks, that have the capacity for earnings, dividends, and cash flow growth over the long-term versus a non-productive asset like gold, whose value is derived partially from jewelry demand where it is worn and partially from investment demand where it is stored. Since gold’s value is predominantly in the eyes of its beholder, there is an embedded amount of speculation that accentuates its price volatility.

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