Why Four Peaks Wealth Management’s Year-End Tax Strategy Works for You

March 2017 FPWM Client Learning Tool

What the numbers mean on your Form 1099

The gain or loss on your tax statement from Schwab for last year is not your actual total portfolio gain for the year. Compare the total account value at the end of the year with the account value at the beginning of the year for your actual gain.

graphic of a road map marker on a tablet

Diversification & its effect on year-end taxes

FPWM creates portfolios with a diversified mix of assets. Then we work to minimize your taxes owed at the end of the year. We may sell assets to offset gains so that you owe less to the IRS. Some assets may be held so that gains can be deferred until a future date.


A simple example

You start the year with $100 in A, B, and C.
At year end, A is up 20% to $120,
B is down 10% to $90 and C is up 30% to $130.
Your total investment value is now $340.
Gain for the Year: $40 or 13.3%

You sell A for a $20 gain and B for a $10 loss.
You do not sell C, so no tax is currently owed on the $30 increase.
Your Schwab account will report a $10 taxable gain, which is only 3.33%.
But remember, you actually gained 13.3% for the year.

Tax impact of deferring gains

TAX at 25% RATE if all recognized $10

ACTUAL TAX at 25% RATE $2.50

RESULT? An additional $7.50 working for YOU

“At FPWM we intentionally take steps to keep the taxes you owe as low as we can.”

–Dr. Allen Atkins, Finance Professor, Finance Professor and FPWM Chief Market Strategist

graphic illustrating the gains from this simple example


We would be happy to discuss this with you. For a PDF file of this Taxes & Your Investment Return client learning tool, press HERE.