***Breakdown on how you could be taxed***

[easyrider]

Money is Money Right!

By David A. Kauwe

I've had many folks ask me about the Charitable Remainder Trust and how the income generated from it will be taxed. I'd like to therefore talk about the "Four Tier Accounting System!"

The Four-Tiers are the following: Tier 1: Ordinary Income and Dividends 35%/15% Tier 2: Capital Gain

Short Term Gain 35%

Tangible Personalty 28%

Depreciation Gain 25%

Long-Term Gain 15%/5%

Tier 3: Tax-Free 0% Tier 4: Return of Principal 0%

As you invest in various investments, they will hopefully yield a positive appreciation or income each year. The income that is paid out to the recipient each year will be counted as one or more of the four types of income.

Tier 1 - All income classified as ordinary income taxed at 35% will be paid out first, plus dividends are counted as ordinary income just at a lesser tax rate of 15%.

Tier 2 - If the amount paid out exceeds that of the ordinary income amount, next would be any generated capital gains incomes. If for example, you purchased stocks and bonds, they appreciated and you then sold them for a profit, you would have a short term capital gain of 35% if you held them for less than 12 months. It would be 15% of you held the assets for over 12 months before you sold them and made a profit. Tangible Personal Property gains are taxed at 28% and any gains generated above and beyond recaptured depreciation is taxed at 25%. Since the main objective is to generate as little as possible taxable income each year, it should be the purpose of the investment advisor to recommend investments that would minimize your taxable income.

Tier 3 - Several strategies can be utilized to provide Tax-Free Income. Municipal Bonds, a combination of Immediate and Deferred Annuities and Life Insurance are typical strategies which accomplish the desire goal of generating Tax-Free Income.

Tier 4 - When all the other types of income have been exhausted and still more income is required to be paid out, the final type of income will be a return of a part of the corpus or the original amount donated to the Trust.

So if you structure your investments right in your Charitable Remainder Trust, you can benefit from the Tax Deduction up front, not have to pay on the appreciation at the RV of your Dinar, and minimize your taxable income from your CRT. That in combination with proper Life Insurance planning you can set up yourself for a Tax-Free Income for the remainder of your life.

[Dr Hubby]

Money is Money Right!

By David A. Kauwe

I've had many folks ask me about the Charitable Remainder Trust and how the income generated from it will be taxed. I'd like to therefore talk about the "Four Tier Accounting System!"

The Four-Tiers are the following: Tier 1: Ordinary Income and Dividends 35%/15% Tier 2: Capital Gain

Short Term Gain 35%

Tangible Personalty 28%

Depreciation Gain 25%

Long-Term Gain 15%/5%

Tier 3: Tax-Free 0% Tier 4: Return of Principal 0%

As you invest in various investments, they will hopefully yield a positive appreciation or income each year. The income that is paid out to the recipient each year will be counted as one or more of the four types of income.

Tier 1 - All income classified as ordinary income taxed at 35% will be paid out first, plus dividends are counted as ordinary income just at a lesser tax rate of 15%.

Tier 2 - If the amount paid out exceeds that of the ordinary income amount, next would be any generated capital gains incomes. If for example, you purchased stocks and bonds, they appreciated and you then sold them for a profit, you would have a short term capital gain of 35% if you held them for less than 12 months. It would be 15% of you held the assets for over 12 months before you sold them and made a profit. Tangible Personal Property gains are taxed at 28% and any gains generated above and beyond recaptured depreciation is taxed at 25%. Since the main objective is to generate as little as possible taxable income each year, it should be the purpose of the investment advisor to recommend investments that would minimize your taxable income.

Tier 3 - Several strategies can be utilized to provide Tax-Free Income. Municipal Bonds, a combination of Immediate and Deferred Annuities and Life Insurance are typical strategies which accomplish the desire goal of generating Tax-Free Income.

Tier 4 - When all the other types of income have been exhausted and still more income is required to be paid out, the final type of income will be a return of a part of the corpus or the original amount donated to the Trust.

So if you structure your investments right in your Charitable Remainder Trust, you can benefit from the Tax Deduction up front, not have to pay on the appreciation at the RV of your Dinar, and minimize your taxable income from your CRT. That in combination with proper Life Insurance planning you can set up yourself for a Tax-Free Income for the remainder of your life.

Easyrider, this is very interesting. How do I get more specifics about these stratagies? How, what, where, why, when...etc??? Thanks

[aliciadogz]

I was talking friend last night at work and she said we also have paid Federal income tax, including the gains tax.She couldn't get into it ,because, she was busy.What ,your thought on it ?She pretty smart lady so it makes feel she might be right.Thanks EASY!

Edited June 22, 2011 by mydogz

[Psych]

Wow EASY....looks a lot like the weekly tidbits sent out by a certain DD. Good stuff though.

[easyrider]

Wow EASY....looks a lot like the weekly tidbits sent out by a certain DD. Good stuff though.

it most certainly is.. just brought it over here from DD

[ExecConsult]

Easyrider,

The information you brought over from DD is correct. However, it is missing a very important piece. Those placing dinar in a CRT may never have to worry about how their investments are structured for income purposes. Following is why:

Under the four tiered tax system for CRTs, ALL of tier one must be paid out for the current year and all prior years before any tier 2 income is considered. Within tier 2 ALL of short-term capital gains must be paid out for the current year and all prior years before the 28% property income (i.e. artwork) is considered. This continues on down. To get to each successive level the level above (of higher tax percentage) must be completely exhausted. The reason this is critical to dinar investors is that when placing dinar in a CRT, the majority of the income that CRT ever sees is going to come from exchanging dinar for USD. Whether you believe that it will be ordinary income or capital gains, what is important to understand is that you will most likely never be able to exhaust the income from the exchange to get to any level with better tax treatment beneath it before the CRT terminates.

Best of Blessings,

Mark

Edited June 26, 2011 by ExecConsult