{INTERVIEW} Tax Swaps

The Miles Franklin Show-Maurice Jackson interviews Andy Schectman about Tax Swaps.  
 
CLICK HERE to listen, or you can read the transcript below.
 
Maurice Jackson: Welcome to the Miles Franklin Show. I’m your host, Maurice Jackson. Joining us for a conversation is Andy Schectman, the President of Miles Franklin Precious Metals Investments. Mr. Schectman, welcome to the show sir.
Andy Schectman: Thank you Maurice, appreciate being here.
Maurice Jackson: Andy, a big discussion this time of the year are tax swaps. For someone new to the program, what is a tax swap?
Andy Schectman: Sure, Maurice. The term tax swap is somewhat akin to the phrase 30 day wash rule. The 30 day wash rule in securities is a law that says you are not allowed to sell a security, book a loss and then buy it or anything similar to it back within 30 days. The rationale behind that Maurice is that someone who has a let’s say a stock position, that’s down, but that they like, they could sell that stock, book a loss, write it off against a huge capital gain, and then re-purchase that stock for a small commission. The IRS says that’s illegal. Does not apply however, to physical commodities.
So the 30 day wash rule is only pertaining to securities. As it pertains to physical gold, it doesn’t apply. In other words, someone who has a loss in a precious metals position would be able to sell that position to us, immediately repurchase it at normal business spreads to book the loss for their current year taxes and receive their precious metals back. The key to the transaction however is that, custody has to change hands. So the metal would have to be sent in from the client to Miles Franklin or if it’s in a depository, the metal would have to be moved out of their account into our account and then back. But that’s all completely legal.
But it’s important to note Maurice that any time clients are doing deals like this that involve taxation, it’s always important to seek their own counsel with their own tax advisor. We’ve done that and feel very comfortable in recommending it, but by all means it’s important that every single person who’s listening to this, if they’re interested, do their own due diligence and research first to make sure that their accountant feels comfortable allowing it.
 
Maurice Jackson: So the key here Andy, if I’m hearing this correctly, is that there has to be change of ownership?
Andy Schectman: Yeah, that’s correct. You can’t do it on paper. Just to say, okay I’ll buy it back, and then well, you’ve changed your mind and on paper that’s not really doing it the right way. And if you’re going to exploit the loophole, we feel it’s very important to do it the right way. And the right way would be to send the metal in, have it be received, opened up under camera and re-packaged and sent back to the client the right way.
If we do things the right way, then you don’t have to look over your shoulder. You know, again we’re talking about taxation and the IRS and if we’re going to exploit the bounds of legality, we want to do it the right way, without doing it I guess you could say halfway, which would open things up to dispute, and or trouble. So we don’t want to do that.
Maurice Jackson: Andy, as always, you’re a deep reservoir of knowledge. Thank you for your valuable insights and look forward to speaking with you next week.
Andy Schectman:  Absolutely, as do I Maurice. And again, I just want to underscore that this really is something that we’re very, very comfortable doing and have been doing it for many, many years. And for clients looking to book a loss and gain some privacy and never relinquish their gold for more than a few days, it’s a really, really good way to do it. So if any of your listeners or readers have questions, please have them feel free to give us a call at 1-800-822-8080, and I can always be reached at [email protected]
Maurice Jackson:  And I just want to re-echo what you’re conveying here as well, Andy, you know, last but not least, please visit our website, which is www.milesfranklin.com. For more information regarding today’s discussion and for all your precious metals investment needs, for questions or comments, please call again, 800-822-8080 or email [email protected]
Speaker 3: Thank you for listening to today’s program. Miles Franklin Precious Metals Investments is the world’s most distinguished and trusted name for your precious metals portfolio. Visit our website at www.milesfranklin.com for your next precious metals purchase, including precious metal IRAs, offshore storage accounts and safety deposit boxes.
The information provided by Miles Franklin is for educational and information purposes only, without any express or implied warranty of any kind, including warranties of accuracy, completeness, or fitness for any particular purpose. The information is not intended to be and does not constitute financial investment or training advice or any other advice. You should not make any financial investment or trading decision based on any of the information presented without first undertaking independent due diligence in consultation with a professional broker or competent financial advisor.
About Miles Franklin

Miles Franklin was founded in January, 1990 by David MILES Schectman.  David’s son, Andy Schectman, our CEO, joined Miles Franklin in 1991.  Miles Franklin’s primary focus from 1990 through 1998 was the Swiss Annuity and we were one of the two top firms in the industry.  In November, 2000, we decided to de-emphasize our focus on off-shore investing and moved primarily into gold and silver, which we felt were about to enter into a long-term bull market cycle.  Our timing and our new direction proved to be the right thing to do.

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