Each member of this group discussion will teach the other members about a tax planning topic based on a client scenario. This discussion will inform the short paper due in this module and prepare you for advising the client in the final project.
John is interested in tax planning and saving for his children’s education. He needs some further information on the topics below:
He has several long- and short-term investments that he would like to sell to put his children through college, and he does not know the tax consequences associated with them if he sells.
He is considering taking a second mortgage or home equity loan on the house in order to increase funds available for his children’s tuition. He would like to understand the deductibility of the interest and any limitations that exist.
He is considering contributing to his IRA or converting to a Roth, but maybe he can wait a couple years before doing this as he believes there are severe tax consequences to this. He would also like to know about the income limitations to convert from an IRA to a Roth.
He asks about any credits that he could get for paying for his children’s tuition, room, and housing.
John is married and has a combined adjusted gross income of $135,000; he currently has a mortgage of $500,000.
Each group member will be assigned one topic from the following list and discuss this topic within the group:
Investment sales
Interest deduction
IRA/Roth
Educational tax credits
Each group member will explain the tax consequences associated with his or her topic and how it relates to John’s situation.
Discuss examples within the group.
In your reply, discuss contrasting opportunities for other topics that you think would be better for John. Each member of the group must participate within the group discussion.
Each team member will turn in his or her own short paper (in assignment 6-2) detailing the tax planning for each topic.
