A Different Degree of Wealth

Balancing the Scales: Capital Gains, Loss Opportunities, and the Roth Conversion Assessment

Capital assets are integral to our financial landscape, encompassing almost everything we own and use for personal or investment purposes. When these assets are sold, the difference between their adjusted basis (original value plus improvements and minus depreciation) and the sale price results in a capital gain or loss. Depending on the duration the asset was held before selling, the gain or loss is categorized as short-term (less than a year) or long-term (more than a year).

Understanding Net Capital Gain

Think of a net capital gain like the final score after a game of financial tug-of-war: you add up what you’ve made from investments you’ve sold after holding them for over a year (your long-term gains) and then subtract what you’ve lost on investments you’ve sold within a year (your short-term losses). The amount you’re left with can affect your taxes.

Depending on how much money you make in a year, the government can tax this net gain at different rates, sometimes not at all (0%) or up to 20% for most people. But there are exceptions, like when you’re dealing with special items like collectibles or certain business stocks, where the tax rate could jump higher than 20%. Special items like collectibles are taxed at a maximum rate of 28%, and certain small business stock gains may also face higher rates.

Taxation Nuances:

  • Rates: Capital gains don’t have a one-size-fits-all tax rate. Depending on your taxable income, you could be taxed at 0%, 15%, or 20%. However, certain types of gains might be subjected to rates greater than 20%.
  • Deductions: If you’ve incurred capital losses, there’s a silver lining. You can deduct these losses, albeit up to a limit of $3,000 ($1,500 if you’re married filing separately). If your losses exceed this, they can be carried forward to future years.
  • Reporting: All capital transactions should be meticulously reported on Form 8949, summarized later on Schedule D (Form 1040).
  • Additional Obligations: If you’ve reaped taxable capital gains, you might need to make estimated tax payments. Also, the Net Investment Income Tax (NIIT) might come into play for those with significant investment income.

Tax-loss Harvesting: A Strategic Tax Minimization Approach

What is Tax-loss Harvesting?: It’s a proactive strategy that savvy investors use to minimize capital gains taxes. When they identify an underperforming asset in their portfolio, they sell it at a net loss. This loss can then offset capital gains tax from profitable assets, especially beneficial for high-taxed short-term gains.

Tax-loss harvesting is especially useful against high-taxed short-term gains and must be done carefully to avoid triggering the wash-sale rule, which prohibits claiming a loss on a security if a substantially identical one is purchased within 30 days before or after the sale.

When and How:

  • Timing: Most investors employ this strategy towards the year’s end. It allows them to assess their portfolio’s annual performance, considering its tax implications.
  • Replacement: Post the sale, it’s common (and smart) to replace the sold asset with a similar one. This maintains the portfolio’s balance regarding expected risk and returns. However, be wary of the IRS wash-sale rule. Purchasing the same or a substantially similar asset within 30 days before or after the sale could invalidate the loss for tax purposes.
  • Excess Losses: If your losses surpass your gains for the year, you can deduct up to $3,000 from your total income. Anything beyond that can be carried forward.

Roth Conversion: Securing Future Finances

Why Roth? Roth IRAs are attractive retirement savings vehicles, offering tax-free withdrawals and no mandated distributions after a certain age. This makes them particularly appealing to those expecting higher taxes during retirement.

Roth IRAs provide tax-free withdrawals and no required minimum distributions (RMDs), unlike Traditional IRAs which start RMDs at age 72. These benefits are preserved in a Roth conversion.

The Conversion:

  • Eligibility: Even if your income surpasses the typical Roth IRA contribution limits, you’re not left out. The Roth conversion allows you to convert funds from a traditional IRA to a Roth IRA.
  • Tax Implications: A conversion isn’t a free pass. You’ll owe taxes on the converted amount. And, if you get antsy and withdraw these funds within five years, there’s a 10% penalty awaiting.
  • Strategic Approaches: Since taxes are inevitable in conversions, optimizing when and how much you convert is vital. Some strategies include:
    • Time Diversification: Instead of converting a massive sum at once, spread it over several years to potentially lower the tax bite.
    • Market Watch: Monitor market conditions. Converting during a downturn might reduce the taxable amount.

In conclusion, financial health isn’t just about earning but also smartly managing, preserving, and growing your wealth. Whether it’s through understanding capital gains, using strategies like tax-loss harvesting, or opting for Roth conversions, proactive financial planning is the cornerstone of sustainable wealth.

For more information on Capital Gains, Loss Opportunities, and Roth Conversions, read Chapter 6 of “Wealth on Purpose.” If you have any questions, give us a call.

Have a great weekend!

Source: Located at the bottom of the articles

Golf Tip of the Week

The Science Behind Golf’s New ‘Super-Bomber’ — And What You Can Learn From It

On paper Gordon Sargent doesn’t look like the kind of kid who could revolutionize the game of golf.

A skinny, 175-pound economics major from Vanderbilt, Sargent has a seemingly otherworldly ability to do something that pros and amateurs alike dream of: Hit the ball unbelievably far.

Sargent’s driving distances are so incredible—at times approaching 400 yards at points—that it’s plunging some of golf’s old guard into a kind of existential crises about distance in the game of golf, and breaking the brains of golf fans everywhere.

But what’s the science behind Gordon Sargent’s unbelievable speed? How can he hit the ball so far? 

Gordon Sargent offered a glimpse into what he’s capable of at the 2022 NCAA Championship. On the first playoff hole, a 520-yard par-5, Sargent hit a drive 380 yards, leaving himself just 140 yards for his approach. He wedged it to five feet, and made the putt to win.

A hard hole, which he made look easy.

So, how can Sargent squeeze so many yards out of a relatively normal-looking frame?

The truth is there’s no one reason why a golfer can hit a ball 380 yards. Sargent does lots of things well in his golf swing which give him his unbelievable speed. But perhaps the key move in his golf swing comes right here, at the top of his backswing.

Look closely and you’ll see as his hands and arms complete his backswing, his hips begin unwinding towards the target.

It’s a small movement, but this helps Sargent create an incredible amount of torque, which he uses to create such incredible speed.

The reason why is because of a concept called X-Factor, a really innovative breakthrough that was created and popularized by the legendary teacher Jim McClean.

X-Factor is a simple measurement in the difference between a golfer’s shoulder turn, and their hip turn, at the top of the backswing. If a golfer turns their shoulders 100 degrees on the backswing, and turns their hips 50 degrees, the difference is 50 degrees, so their x factor is 50 degrees. As of 2013, the Titleist Performance Institute says tour players have an average x-factor of 42 degrees.

But on the downswing, like you can see in Sargent’s swing, the hips start unwinding before the shoulders, so the X-factor actually increases slightly, by an average of about five degrees for tour players, TPI says.

That’s called the X-factor stretch, and it’s a big power source in your golf swing.

Basically every undersized, long hitter has a really big x-factor stretch. John Daly had a huge X-factor. You could tell Young Ben Hogan had one too. Jaime Sadlowski had a crazy huge X-factor, and so does Bubba Watson and Rory McIlroy.

And that x-factor stretch is super important, because it torques the muscles in your body into a tight, tense knot, read to blow. A bit like like an archer, pulling back the bow as tight as he can, and then letting it go.

That’s what’s going on in Gordon Sargent’s golf swing. We’re not sure his exact numbers, but you can see his shoulders have turned well past 90 degrees. If we use Rory McIlroy’s 2014 swing as a reference point, Rory’s shoulder turn was measured at close to 110 degrees, so I bet Sargent is something similar, meaning his X-Factor could reach a number close to (60 or 70).

And then, as Sargent finishes turning his shoulders, he begins firing his hips. That increases the angle between his shoulders and hips, which stretches apart his upper and lower body, and then catapults his arms down with incredible speed.

And it’s catapulting Sargent’s rise to the very top, too. Since that NCAA victory, Sargent played in the Masters, finished low am at the US Open and went unbeaten in the Walker Cup at the Old Course. Sargent is strong, athletic, flexible, speedy. And get ready, because Sargent just earned his PGA Tour card. Remember the name, remember the swing.

Tip adapted from golfdigest.comi

Recipe of the Week

Thanksgiving Breakfast Casserole

8 Servings


  • 2 pounds sage sausage
  • 2 Granny Smith apples, diced
  • 1 large yellow onion, diced
  • 1 tablespoon chopped fresh sage
  • 12 large eggs
  • 2 cups whole milk
  • 1/2 cup half-and-half
  • Kosher salt and freshly ground black pepper
  • Salted butter, for greasing the lasagna pan
  • 6 cinnamon raisin English muffins, cut into bite-size chunks
  • 2 1/2 cups grated white Cheddar
  • 2 tablespoons chopped fresh parsley


  • Set a large skillet over medium heat and add the sausage. Cook until browned and cooked through, 7 to 9 minutes. Remove the sausage with a slotted spoon and drain on a paper towel lined plate. Without cleaning the skillet, add the apples, onion and sage and cook until the onion has softened, 2 to 3 minutes. Remove the pan from the heat and set aside.
  • Mix together the eggs, milk and half-and-half in a large pitcher or bowl. Season with salt and pepper and set aside.
  • Grease a large casserole dish with some butter. Layer in half the English muffins, half the sausage, half the apple/onion mixture and half the cheese. Repeat with the other half of the same ingredients, ending with the cheese. Slowly pour the egg mixture all over the top. Cover with plastic wrap and refrigerate overnight.
  • Remove the pan from the fridge 20 to 30 minutes before baking. Preheat the oven to 350 degrees F.
  • Replace the plastic wrap on top of the casserole with aluminum foil. Bake for 35 to 40 minutes, then remove the foil and continue to bake until the top is golden brown and slightly crisp, 10 to 15 minutes more.
  • Sprinkle with the chopped parsley. Serve warm and enjoy.



Recipe adapted from Foodnetwork.comii

Health Tip of the Week

What to Know About Split Ends

Split-end hairs can happen to anyone at any time—they do not discriminate when it comes to race, age, or gender. While hair is generally strong, it is still susceptible to damage from wear and tear. This damage, known as split ends, occurs at the end of your hair since that is where the oldest and most fragile strands of your hair reside. 

What Are Split Ends?

In an attempt to maintain beautiful-looking hair, you may end up using products that claim to promote healthy-looking hair but, unfortunately, may end up doing the opposite instead. When damage occurs to your hair, it results in your hair becoming weak and prone to breakage or splitting. This can lead to unhealthy or frizzy-looking hair. Eventually, thinning of the hair and bald spots may occur as a result of the continuing and untreated damage. 

What Causes Split Ends?

There are several factors and habits that can lead to the development of split ends. These factors and habits include: 

  • Rubbing shampoo throughout your hair during the washing process
  • Not using conditioner 
  • Allowing your hair to come into contact with harsh chemicals such as the chemicals in swimming pools 
  • Using a towel to rub your hair dry
  • Brushing your hair after a shower while it’s still wet 
  • Using blow dryers, hot combs, and/or curling irons frequently and on high settings
  • Applying long-lasting hair styling products 
  • Securing your hair in a tight ponytail, bun, braids, or other updos 
  • Wearing hair extensions and weaves 
  • Using professional hair treatments such as perming, coloring, or relaxing your hair 
  • Overbrushing your hair 

Aside from those factors, split ends can also occur from environmental, nutritional, and genetic causes.

What Do Split Ends Look Like?

Although split ends are all primarily the same, occurring when hair becomes split at the tips or ends, there are a few different types that have slight differences. Not only are there different types of split ends, but each type has its own causes, and it’s important to understand those reasons. 

  • Double Split: The most common type of split end, and the one that is the easiest to recognize, is the double split. These splits happen when the tips of your hair split in two, creating a Y-shape, and occur due to the hair’s cuticle being worn or damaged, oftentimes by the friction created from over-styling or overbrushing your hair.
  • Partial Split: A partial split is similar to that of a double split but occurs on a smaller scale. Fortunately, partial splits are not that serious—usually occurring when your hair is dry and has sustained some damage. With a bit of care and a limit to heat exposure, you can fix your hair up before the partial split causes the damage to your hair to worsen. 
  • Tree Split: If you notice that your hair has strands that are split into several different places and look similar to a tree with branches sticking out, then you have what is known as a tree split. These split types signal that your hair is damaged and requires proper trimming.
  • Fork Split: The fork split resembles a fork shape with three splits that stick out similar to that of a pronged fork. This type of split occurs when your hair has not received proper hydration.

Regardless of what type of split end has occurred, there should be no mistaking it when you see the obvious signs of damage. 

Are Split Ends Bad?

Split ends are generally bad and signal a problem with your hair that should be addressed. Split ends also can prevent hair growth and may even cause your hair to snap.

Split ends also point to hair that has become damaged, weakened, and unhealthy.  

Split Ends Treatment

Despite the fact that there are products marketed and geared toward fixing split ends, they do not provide enough help. Since there are no treatments or cures for split ends, the only way to get rid of them is to get your hair cut or trimmed. By trimming your hair, you’re able to prevent your hair from splitting further up the strand, avoiding further damage to your hair.

How to Prevent Split Ends

While there is no treatment for split ends other than getting your hair cut, there are several ways that you can prevent split ends from occurring. 

  • Avoid washing your hair daily: When you wash your hair, you’re getting rid of natural oils that are there to moisturize your hair. Instead of washing your hair every day, wash it once every two or three days.
  • Change how you brush your hair: Be mindful of the type of hairbrush or comb that you use to brush your hair. You’ll want to use a brush with flexible bristles or one with a cushioned paddle. As you’re brushing, first work on detangling the ends before continuing up the strands at a slow and careful pace. Additionally, you’ll want to brush your hair prior to using heated products like flat irons and only brush wet hair with a wide tooth comb.
  • Avoid scrubbing shampoo into your hair: Apply the shampoo to your scalp and scrub. As you rinse the shampoo away, it will make its way down throughout the rest of your hair, providing your hair with plenty of shampoo.
  • Make sure to condition your ends first: Apply conditioner to the ends of your hair first before applying conditioner anywhere else. Allow the conditioner to remain on the tips for a few minutes in order to allow it to soak up.
  • Be careful when towel drying: To avoid damaging your hair by twisting or scrubbing it when drying with a towel, carefully squeeze or scrunch the hair in the towel instead.
  • Don’t use heat to dry the ends of your hair: Since the tips of the hair are the most fragile, it’s important that heated products such as blow dryers are used to dry the midsection of hair only and never the ends.
  • Change how you style your hair: It’s important to ensure that when using styling accessories like curling irons you don’t allow the tips to receive too much heat. Instead of wrapping your hair from root to tip around a curling iron, position the iron at the root and then proceed to carefully wrap your hair around it.
  • Receive regular trims: Receiving regular trims is important to keeping your hair healthy and removing any split ends that have started to form. As such, regular trims should be done every six to eight weeks.


Tip adapted from WebMD.comiii 

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Topic No. 409, Capital Gains and Losses

Tax-Loss Harvesting: Definition and Example

Roth IRA Conversion Rules


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This material is prepared by Ballentine Capital Advisors for informational purposes only. It is not intended to serve as a substitute for personalized investment advice or as a recommendation or solicitation or any particular security, strategy, or investment product.

No representation is being made that any account will or is likely to achieve future profits or losses similar to those shown. You should not assume that investment decisions we make in the future will be profitable or equal the investment performance of the past. Past performance does not indicate future results.

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