Tax Minimization Strategy for Wealth Management Client

Medium Private Wealth Management Tax Considerations

Tom is a 42-year-old wealth management client with a total net worth of $5 million and a tax bracket of 35%. He holds diverse assets including stock portfolios, real estate investments, and traditional IRAs. Recently, he has been considering selling a portion of his stock investments to access liquidity for a new business venture. As his wealth manager, it is crucial to evaluate the tax implications of his potential sale across different asset classes.

Which of the following strategies would best help Tom minimize his tax burden connected to this sale?

Sell investments that will produce a capital gain first, thus deferring the tax implications of other assets.

Sell investments that have depreciated in value to offset future taxable gains from other investment sales.

Consider holding investments for over a year to benefit from long-term capital gains tax rates.

Hint

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