Comments on: Tax Information by Guest Author Owen Sargent, CPA https://www.thebluecollarinvestor.com/tax-information-by-guest-author-owen-sargent-cpa/ Learn how to invest by selling stock options. Mon, 04 Jun 2012 13:59:44 +0000 hourly 1 By: Alan Ellman https://www.thebluecollarinvestor.com/tax-information-by-guest-author-owen-sargent-cpa/#comment-5982 Mon, 04 Jun 2012 13:59:44 +0000 /blog/?p=3013#comment-5982 In reply to Dr Robert J Houchin.

Dr. Houchin,

Here is the response from Owen Sargent, CPA osargentcpa@aol.com):

Generally, capital gains are not distributable income in a trust. They are simply converting the trust corpus assets from one form to another. Now, that said, if the trust document says that capital gains are distributable income, then they are. You must check the trust document. Many attorneys don’t know that they need to specify this.

Income tax treatment:

There is no such thing as distributable capital losses, except for the final year, when the trust closes. Any capital loss carryover is distributed to the beneficiaries on the final K1.

If the capital gains are distributable income, then, to the extent that there are distributions, a portion of the distribution will be capital gains reported on the beneficiary’s K1.

If the gains are not distributable, or the distributions are less than the net income of the trust, the trust will have taxable income. The trust will pay the tax. Ordinary income and short term capital gains are taxed at 35% in a trust. Long term gains are maxed at 15%, just as they are on personal returns.

All income items are calculated as they would be for a personal income tax return. This includes capital gains and losses. There is a Form 1041 Schedule D.

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By: Dr Robert J Houchin https://www.thebluecollarinvestor.com/tax-information-by-guest-author-owen-sargent-cpa/#comment-5971 Sun, 03 Jun 2012 20:22:20 +0000 /blog/?p=3013#comment-5971 We have some large family trusts.
Questions

1. I sell a coverd Call and it expires. 100% of Premium is Distributable Income ?

2. I sell a coverd Call and it is exercised. Premium is added to the
the sales price and the trust pays Cap Gains. Is any part of the Premium Distributable Income?

3. I sell a covered call and buy it back for less than I received. Is the difference distributalbe Income?

4. I sell a covered call and buy it back for more than I received.
Ordinary Loss against Income?

5. I sell a naked put and it expires. Premium is 100% Distributale Income ?

6. I sell a naked put and it is exercised. I reduce the basis by the premium and distribute nothing? I leave the bais and distribute the Premium ?

7. I sell a naked put and buy it back for less than I received. Difference is distributalble Income?

8. I sell a naked put and buy it back for more than I recieved.
Ordinary Loss against Income?

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By: Eddie Q https://www.thebluecollarinvestor.com/tax-information-by-guest-author-owen-sargent-cpa/#comment-5281 Tue, 20 Mar 2012 22:03:54 +0000 /blog/?p=3013#comment-5281 I have a general question about what type of account would be the most advantageous to trade in, mainly directed to Owen or anyone who feels free to chime in.

My question is this, If I have $50,000 to invest, which type of account would be the best to trade in, standard trading account or Roth IRA ?

Here are the facts as I see them STD acct vs. ROTH acct:

STD Acct

Pros:
There are really none that I can think of

Cons:
Capital gains ie…15% since all are short term holdings
Having to track trading info…SCH D tax filing headache

ROTH Acct

Pros:
All earnings are tax exempt !
Not having to keep track of trades for tax filing

Cons:
Only being able to deposit, in my case, $6000 annually, anything more is subject to a 6% annual penalty, till the overage is nullified based on a $6000 yearly deposit allowance. ( If I have my facts straight on this, feel free to correct me if I am in error )

That being said, it would appear to me, that having an annual profit target of say 36% (3% monthly, not including compounding), one would be able to pay the 6% penalty annually on additional deposit amounts (only having to pay this penalty on deposited amount,not on any earnings), and still come out ahead, instead of having to pay 15% capital gains taxes in a STD account.

Am I missing something here or do I have my facts straight ?

Any advice would certainly be welcomed, as I soon will have @ $50,000 I need to put to work somewhere, thinking of splitting it over my wife’s and my ROTH IRA accounts.

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By: Barry B https://www.thebluecollarinvestor.com/tax-information-by-guest-author-owen-sargent-cpa/#comment-1975 Sat, 18 Dec 2010 22:14:56 +0000 /blog/?p=3013#comment-1975 DaveD (#43),

Dave…
I took a look at YGE with a fresh set of eyes. Here are some of my thoughts…
– Support around the $10 area
– A down trend line beginning with the Oct 14 swing high (5 touches). The downtrend line combined with support at $10 displays a descending triangle. Historically, this is a down trending pattern.
– The Bollinger Bands are constricting meaning that there will be a breakout in the near term. That, combined with the descending triangle would indicate a breakdown is likely.
– The price chart is stacked down, meaning that the price is below the 5EMA, 20EMA, 50SMA, 100EMA, and 200SMA.
– IBD’s Smart Select Ratings are not all green per the BCI system (3 red, 2 green, and 1 yellow).
– IBD’s Industry Ranking is 170 out of 197.
– The MACD is slightly above the signal line and the Slow Stochastics is slightly below it’s signal line.

So, if you are following a “pure” BCI methodology, it doesn’t meet the systems requirements. The descending triangle chart pattern combined with the constricting Boll Bands would cause me personal worry because I tend to be VERY conservative.

I wanted to give you another point of view so you can make a better decision.

Best,

Barry

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By: DaveD https://www.thebluecollarinvestor.com/tax-information-by-guest-author-owen-sargent-cpa/#comment-1974 Sat, 18 Dec 2010 07:05:35 +0000 /blog/?p=3013#comment-1974 YGE

Yes, I will be looking at this stock for december trading… Here is why…

Funementally its doing ok. Earns a EPS rating of 99. MSN rating of 5. IBD rating suggest this stock is strong,

Technically this stock impresses me. Maybe others here would think im absolutelycrazy. But, seriously, pull up an 18 month chart. There is super strong support at 10 dollars with 10 points of validation (note the stocks current price is $10.21). Stochastics are turning up . MACD is trending sideways, but still slowly heading north. In addition, last friday this stock completed a bullish engulfing pattern

Now if we bought this stock now ($10.21) and sold the ITM call (10 dollar strike) for 65 cents we would have a ROO OF 4.4% and downside protection of 2.1%…

Happy Trading everyone!

Dave

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By: owen https://www.thebluecollarinvestor.com/tax-information-by-guest-author-owen-sargent-cpa/#comment-1973 Fri, 17 Dec 2010 19:32:31 +0000 /blog/?p=3013#comment-1973 Congress burned the 12:30AM oil and we got our tax bill. For the next two years we keep all the rates we have had and, if you are unlucky enough (and your family is lucky enough) for you to die with more than $5,000,000 your estate will save a bunch of money.

Trade on BCI, trade on!

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By: owen https://www.thebluecollarinvestor.com/tax-information-by-guest-author-owen-sargent-cpa/#comment-1972 Fri, 17 Dec 2010 19:24:29 +0000 /blog/?p=3013#comment-1972 Finally. Netflix took its own sweet time coming back up for going into the S&P 500. I got whacked for about $1,300 because I sold the NFLX DEC $190 put and bought the Dec $185. I closed out both for a net loss. (I told you the short put spread was not perfect) I did, however, make $1,200 on the AAPL Dec $300 put – Dec $290 put spread, so I am still surviving. (This assumes Steve Jobs does not die before 4:00PM)

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