Every Once In A While

Very occasionally, you see things that produce you double-check and triple-check what you’re looking at, and Advanced Energy Industries (“AEIS”) (AEIS) is a good example. This manufacturer of key components used in semiconductor manufacturing and a variety of other specialized production processes has continued to rack up excellent, better-than-expected results.

And the stocks are … down, about 10% from when I last composed about the company? That’s not to state that I believe AEIS is cheap today. I believe there’s a “hey, it isn’t quite as expensive as some other ideas in the area” comparative valuation argument today is still pretty healthy but the expectations that appear factored into the price. That said, if AEIS can continue steadily to leverage the ongoing investments in leading-edge semiconductor capacity and post strong numbers, it will not surprise me if the sell-side starts making “buy this laggard” calls.

Under certain conditions, Section 266 allows capitalization appealing to finance a house. Short sellers and others might want to consider the likelihood of a Section 266 election on investment interest expense, too – especially if they plan a standard deduction or don’t have sufficient investment income. Excess interest is a carryover to following taxes years.

The following investment expenses appear transactional, and for that reason eligible for capitalization in Section 266: Storage of valuable metals or cryptocurrency, borrow fees on brief sales, extra risk fees on brief sales, and margin interest expenditures. Consider filing a Section 266-election statement with your tax return, including on an extension. Explain the tax and election treatment in a tax return footnote. Consult a trader tax expert on employing this potential alternative solution.

  • Savings rates are high, potentially reducing consumer spending
  • Can I obtain interest monthly on the term deposit or ASB Term Fund
  • Food and Agribusiness
  • Its possessions and liabilities

If you get full deductibility on Schedule A, it’s safer to miss Section 266 capitalization, that your IRS may scrutinize. If a short-seller qualifies for trader tax status, then stock borrow fees and other short-selling expenses are deductible as business expenses from revenues. If a TTS investor engages an outside investment manager, then investment advisory fees stay investment expenses. Investors engage investment managers for taxable and retirement accounts.

TCJA suspended investment fees and expenditures for taxable accounts, however the new taxes law did not repeal investment fees and expenses for tax-deferred retirement accounts. In case your retirement account engages an outside investment manager, seek to pay their investment fees and costs directly from the retirement plan. Not all brokerage firms shall cooperate if you use a manager other than the firm’s wealth management arm. An expense in a tax-deferred retirement plan is the same as a tax-deferred cost. Caution: Don’t have your pension plan pay fees to you, or a family, as investment managers. The IRS will consider it self-dealing and a prohibited purchase, which might inflate your pension plan. Darren L. Neuschwander, Roger, and CPA Lorence, JD contributed to this blog post. July 19 Webinar, 2018: Investment Fees Is Not Deductible But Borrow Fees Is. Recording available afterward. Click here.