Tax Management

Why tax management is important to us, what it means to us and why it's the focus point of my business - 

Carlos Rasmussen, CPA, PFS and CEO of Rasmussen Capital Management Inc. saw a huge need in 1994 for tax focused investment and wealth management that utilized widely available but seldom discussed strategies to save people money.  We value proactive tax management.  Tax management to us is the art of combining strategies that allow you to arrange your financial affairs in a manner that allows you to defer or recharacterize taxable income, increase or receive tax deductions, and structure an income to encompasses multiple family generations while avoiding taxes.  Employing effective strategies affords you the opportunity to have more money to save and invest, more money to spend, or more opportunities to highlight your generosity and philanthropic desires.

Another way of thinking about tax management is that some strategies allows you to legally defer and flat out avoid paying taxes by taking advantage of beneficial tax-law provisions available under our tax code that increase and accelerate tax deductions, postpone income recognition or recharacterize taxable income from ordinary to capital gain or to tax free income. 

Some of these strategies may include - 

  • Timing (deferring or accelerating taxable income and tax deductions)
  • Income shifting (shifting income from high to low tax rate taxpayers)
  • Income Conversion (converting the income character from high (ordinary taxable income) to lower (Capital Gain) to lowest (tax free income)
  • Stretch strategies (created to pass wealth from generation to generation without incurring transfer taxes such as estate and gift tax or postponement of income taxes)

Examples of Stretch strategies may include the use of Stretch Annuity, Dynasty Trust or a non-qualified stretch.  With a non-qualified stretch planning strategy, the account owner can designate tax-deferred provisions that are passed on to his or her beneficiaries.  This provides the opportunity and benefit to transfer wealth without the tax headaches (tax erosion) of a large, single payment to the beneficiaries.  This strategy provides the beneficiaries more flexibility and control over maintaining the investment. Therefore, the beneficiary has less restraints on wealth transfer, and he or she can receive a larger sum of benefits stretched over a longer period.  This strategy achieves the continued tax-deferred growth over the beneficiary’s lifetime and provides smaller income tax bills by taking only the required minimum distributions over the beneficiary's lifetime.

Why should high net worth individuals, highly compensated individuals and successful business consider a proactive tax management strategy?  Simply put, taxes are a part of most Americans' lives.  We live in a high tax environment at the local level, state level, federal level, and estate and inheritance tax level.  For these reasons, tax management makes sense.