Legal Tax reduction strategies for short term capital gains

New
porange

New

porange
Jul 7, 2021 11 Comments

Besides IRAs/401ks, what are some legal tax reduction strategies for someone who makes frequent short term capital gains? I know hedge funds avoid pre-withdrawal capital gains by transferring gains to an offshore insurance company that reinvests in the next fund. Are there any similar, legal means for the common person to do this or any other strategy?

If not withdrawing funds immediately, then this would be a great strategy for the IRS to capture more tax down the road. Let investors grow their piles, then take a larger tax at a later date due to tax-deferred compound growth.

Any thoughts on family foundations, charities, etc? (assuming you play by the rules in letter and spirit).

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 TOP 11 Comments
  • Why the hell are you asking a bunch of losers on blind instead of consulting with a tax professional if you’re making enough for this to matter?
    Jul 7, 2021 1
  • Uber
    9-9-6

    Go to company page Uber

    9-9-6
    Check tax advantaged account is fidelity
    Jul 7, 2021 0
  • You can creat a Charitable Annuity Trust! Put large gains into it, write off donations and depending on age you can take Up to 8% a year out mostly tax free.

    Another thought is invest in a Variable Universal Life policy. Gains are tax deferred and tax free.
    Jul 7, 2021 4
    • New
      porange

      New

      porange
      OP
      Sounds like I’m being sold on something. No fund will do, not even Fidelity’s incredible FDGRX.

      What availability do you have for executing individual equities and options trades?

      New York Life / Variable Universal Life (aka whole life ins) is great for the 9 figure club, but basically a scam investment for the common man.
      Jul 8, 2021
    • I used to work at one of the top 3 institutions and it hard to find what you are looking for.

      The VUL is good for the common man, it’s just what are you looking to accomplish and if it fits what your looking for. It’s a great option to replace the RotH if you make to much money. Wish you the best and good luck!
      Jul 8, 2021
  • Akuna Capital / R&D
    Kizuna ML

    Go to company page Akuna Capital R&D

     Kizuna ML
    If it's substantial, you could look into professional trader designation (mark to market, income instead of cap gains, can deduct expenses). Alternatively depending on what you are trading you could look into correlated section 1256 instruments instead (60/40 LTCG/STCG)
    Jul 7, 2021 1
    • New
      porange

      New

      porange
      OP
      Thanks! Yup, already have the Section 475 designation and my CPA tabs up the annual expenses.
      Jul 7, 2021
  • VMware
    MhOv54

    Go to company page VMware

    MhOv54
    If you’re willing to invest in cryptocurrency, there’s currently a loophole where you can tax loss harvest crypto losses as there’s no wash sales. Graham Stephan has a video it https://youtu.be/YsYrOR--Wcg
    Jul 8, 2021 0