tax strategies

[moore_capital54]

As for tax strategies Eric,  the US has a very good one that you should seriously look into a structure called a CRUT. There are ways to leverage a CRUT and protect large capital gains. You need someone smart which I am sure you will find.

[hyten1]

moore interesting

 

http://en.wikipedia.org/wiki/Charitable_remainder_unitrust

 

especially the "Tax Planning" section

[ericd1]

Eric.  I do not believe you can write off margin interest expense when purchasing tax-exempt bonds. Best check before embarking on such a strategy.

[ERICOPOLY]

Eric.  I do not believe you can write off margin interest expense when purchasing tax-exempt bonds. Best check before embarking on such a strategy.

:'(

 

Yes, you seem to be correct as they say the same thing here:

 

http://www.ehow.com/list_7566793_tax-questions-margin-buying.html

 

Well, that's too bad as it seemed a reasonably good way to go  :'(

 

I suppose though if one were to buy the municipal bonds first with 100% of the cash, then use margin to buy stocks...  well then the margin wasn't for the muni bonds, now was it?  ;)

[ericd1]

I have some munis and sometimes use margin...I just don't deduct the interest.

 

[berkshiremystery]

Hi Guys,

 

I wanted to opine on the idea of having a COBF Fund/HoldCo. I have previously wanted to bring this subject up privately with Sanjeev. I think it would be very interesting for this group to run (by committee) real money in a transparent manner via a fund structure (or a hold co). Audits, performance etc. It's not such a crazy idea when you think about it, upon formation a committee of investors would be chosen and no investment decision would be made unless the committee collectively decided we liked it. The whole thing would be done transparently in a dedicated thread (or several threads) and the actual trading could be handled by one or two designated members (Sanjeev comes to mine).

 

Anyhow I would like to say that I would be willing to commit $1mm (real money) into such a structure for the group to manage. I would also be willing to pay for all startup costs (administrator, incorporation, audit). I would be very interested in the results.

 

A Holdco would be even more interesting but require much more start-up capital to run effectively. A Fund could be started with $1-2mm and once a track record was built the money would come flowing in.

 

As for fee split etc, all that would be discussed in depth (a few logical ideas come to mind) prior to initiation. I am sure we could come up with something interesting and fair.

 

Hope you are all doing well, Cheers!

 

Moore Capital's idea about a COBF fund/HoldCo is quite interesting. My mind was occasionally also playing with such an idea, that the board someday might want to jump into such a venture. Of course Sanjeev and Alnesh would have to administrator the vehicle. Didn't he want to start anyway a 3rd offshore fund in the Cayman Islands. There flash into my mind some loose random ideas:... of course it should incorporate some swarm like board intelligence of adaptive behavior of the best ideas,... or maybe the vehicle could be some small Bermuda reinsurance company with float (well, I know,... only some wacko idea,... it would be too small and make things complicated,... and we would be lousy inexperienced,... unless we could get professional help from Fairfax,...LOL),... anyway HoldCo would be better instead of fund, because of captive capital. Of course seed money from us board members (and who knows, who might join,... thinking in similar fashion like how Burry got his seed money for Scion). And maybe even Ericopoly might realize that such a vehicle might offer him a unique opportunity to archive certain things in a different matter, that he wouldn't be able to do yet alone. As a joint main principal/and or general partner he would be able to get a "hunting license" from the International Swaps and Derivatives Association to beat up the big boys on Wall Street.  ;D

[SharperDingaan]

Re tax strategies ...

 

These things are country specific. Similarities exist (ie: IRA (US), RRSP (CAN)) - but they are not the same.

 

There is no generic solution. Time horizon & the specific instrument (municipals) can really change things.

 

You want the maximum tax deferral period to maximize the compounding benefit .... but it rapidly drops away if your anticipated tax rate on withdrawal is higher than it was when you put the money in.

 

You want growth to occur in a tax free account (ie: TFSA), not a tax deferred account (ie: RRSP)

 

The tax tail should NOT wag the dog.

 

SD

 

 

[collegeinvestor]

Also you can only deduct interest expense up to your interest income (IRC 163(d)(1). If your interest expense exceeds your interest income this tax benefit can be carried forward indefinitely.

 

What would the spread be between margin interest and municipal bonds right now?

[CONeal]

Hi Guys,

 

I wanted to opine on the idea of having a COBF Fund/HoldCo. I have previously wanted to bring this subject up privately with Sanjeev. I think it would be very interesting for this group to run (by committee) real money in a transparent manner via a fund structure (or a hold co). Audits, performance etc. It's not such a crazy idea when you think about it, upon formation a committee of investors would be chosen and no investment decision would be made unless the committee collectively decided we liked it. The whole thing would be done transparently in a dedicated thread (or several threads) and the actual trading could be handled by one or two designated members (Sanjeev comes to mine).

 

Anyhow I would like to say that I would be willing to commit $1mm (real money) into such a structure for the group to manage. I would also be willing to pay for all startup costs (administrator, incorporation, audit). I would be very interested in the results.

 

A Holdco would be even more interesting but require much more start-up capital to run effectively. A Fund could be started with $1-2mm and once a track record was built the money would come flowing in.

 

As for fee split etc, all that would be discussed in depth (a few logical ideas come to mind) prior to initiation. I am sure we could come up with something interesting and fair.

 

Hope you are all doing well, Cheers!

 

Moore Capital's idea about a COBF fund/HoldCo is quite interesting. My mind was occasionally also playing with such an idea, that the board someday might want to jump into such a venture. Of course Sanjeev and Alnesh would have to administrator the vehicle. Didn't he want to start anyway a 3rd offshore fund in the Cayman Islands. There flash into my mind some loose random ideas:... of course it should incorporate some swarm like board intelligence of adaptive behavior of the best ideas,... or maybe the vehicle could be some small Bermuda reinsurance company with float (well, I know,... only some wacko idea,... it would be too small and make things complicated,... and we would be lousy inexperienced,... unless we could get professional help from Fairfax,...LOL),... anyway HoldCo would be better instead of fund, because of captive capital. Of course seed money from us board members (and who knows, who might join,... thinking in similar fashion like how Burry got his seed money for Scion). And maybe even Ericopoly might realize that such a vehicle might offer him a unique opportunity to archive certain things in a different matter, that he wouldn't be able to do yet alone. As a joint main principal/and or general partner he would be able to get a "hunting license" from the International Swaps and Derivatives Association to beat up the big boys on Wall Street.  ;D

 

Just thinking out loud, once you get into a decision by committee situation wouldn’t your performance become average at best?  With too many cooks in the kitchen no one would be able decide what the main course would be b/c everyone is allergic to something.

[nkp007]

I think the decision by committee is the Achilles' heel here. While we are all of the same religion, we practice it in many, many different ways.