Medtronic, the world’s largest medical technologies company, recently made headlines when the Minneapolis-based company bought the Irish healthcare products company, Covidien, for nearly $43 billion.
The purchase, according to Medtronic executives, will enable the company to invest more aggressively, cut back taxes drastically, and thus create a bigger profit for shareholders—but the investors themselves have not been so quick to celebrate.
See, Medtronic allowed the foreign company to keep a 20% stake in the merger in order to keep the majority of its profits overseas free from American taxes. This move, called an inversion, qualifies as a “taxable event,” and the company’s shareholders are the ones left with the bill—as much as 33 cents on the dollar.
Medtronic urges shareholders, especially individuals, to remain patient as the long-term benefits of the recent acquisition begin to emerge. But this promise hasn’t satisfied everyone. The repercussions of this transaction are complicated, and many … Read More
5 Reasons to Convert to a Roth IRA
Why might you wish to convert all or some of your Traditional IRA to a Roth IRA?
1. The ability to recharacterize allows you 20/20 “hindsight”, effectively allowing you to “undo” conversions that were not advantageous. This allows you to protect against adverse market swings. At a later date recharacterized funds can be converted.
2. The 70 1/2 minimum distribution rule is suspended for Roth IRAs. This will allow additional tax free deferral.
3. Tax rates are expected to increase in the future. Higher future tax rates means that more tax will be paid on taxable IRA distributions than the tax that would be paid on a conversion at a lower rate.
4. Distributions to beneficiaries after your death are tax-free. The might be one of the better reasons for a Roth IRA conversion.
5. If you can afford to pay the income tax on the IRA with non IRA funds, … Read More
Medtronic’s Acquisition Causes Anxiety Among Shareholders
Medtronic, the world’s largest medical technologies company, recently made headlines when the Minneapolis-based company bought the Irish healthcare products company, Covidien, for nearly $43 billion.
The purchase, according to Medtronic executives, will enable the company to invest more aggressively, cut back taxes drastically, and thus create a bigger profit for shareholders—but the investors themselves have not been so quick to celebrate.
See, Medtronic allowed the foreign company to keep a 20% stake in the merger in order to keep the majority of its profits overseas free from American taxes. This move, called an inversion, qualifies as a “taxable event,” and the company’s shareholders are the ones left with the bill—as much as 33 cents on the dollar.
Medtronic urges shareholders, especially individuals, to remain patient as the long-term benefits of the recent acquisition begin to emerge. But this promise hasn’t satisfied everyone. The repercussions of this transaction are complicated, and many … Read More
The IRS Dirty Dozen
Each year, the IRS releases a list of the 12 most common scams that taxpayers may encounter during tax season. Here’s a run-down of the top scams of 2014 and how you can protect yourself.
1. Identity theft
How it works: Someone gets ahold of your personal information—such as your social security number—and commits fraud in your name. They may even file a tax return in your name to get a refund.
How you can protect yourself: Keep your info private by using encrypted passwords online and shredding personal paperwork when you no longer need it. If you think your identity has been stolen, contact the IRS Identity Protection Specialized Unit at 800-908-4490.
2. Telephone scams
How it works: Callers pretend to be from the IRS in order to steal money and personal information. They often say that you owe money and may be arrested if you don’t pay.
How you … Read More