Seeking Alpha

John D. Thomason

View as an RSS Feed
View John D. Thomason's Comments BY TICKER:
Latest  |  Highest rated
  • Stocks, Options, Taxes: Part II - Dividends [View article]
    Update No. 2 - The qualified distinction did not "go away". The resource I had based that comment on was incorrect. All rules on holding period for dividends to be qualified are retained. Also, all rules on the payer, regarding qualified or no, are likewise retained. But the key feature, retention of the reduced rates for qualified dividends, is correct, as detailed above.

    John D. Thomason
    Apr 14 08:05 AM | Likes Like |Link to Comment
  • Stocks, Options, Taxes: Part II - Dividends [View article]
    Hello, DavidBaird,

    Sorry about not getting back to you sooner, I have been busy preparing tax returns in my new occupation. None of the firms' websites provides any info, but based on the IRS definition of qualified dividends, I believe you are correct, they should be qualified. The IRS reference states: to be qualified, dividends must be paid by a US Corporation or a qualified foreign corporation, the latter being defined as meeting one of the following conditions:

    1. The corporation is incorporated in a U.S. possession.

    2. The corporation is eligible for the benefits of a comprehensive income tax treaty with the United States that the Treasury Department determines is satisfactory for this purpose and that includes an exchange of information program. For a list of those treaties, see Table 8-1.

    3. The corporation does not meet (1) or (2) above, but the stock for which the dividend is paid is readily tradable on an established securities market in the United States. See Readily tradable stock , later.

    Readily tradable stock. Any stock (such as common, ordinary, or preferred) or an American depositary receipt in respect of that stock is considered to satisfy requirement (3) under Qualified foreign corporation , if it is listed on a national securities exchange that is registered under section 6 of the Securities Exchange Act of 1934 or on the Nasdaq Stock Market. For a list of the exchanges that meet these requirements, see http://1.usa.gov/1sYtkoY.

    I think it is safe to say that the NYSE meets the exchange requirements. Plus, these stocks are based in countries (UK and Austrailia) that the US has tax treaties with.

    So, I would have to be shown (by Fidelity) why they reason that the dividends are not qualified. It seems to me they meet the requirement in more ways than one.

    John D. Thomason
    Apr 13 11:07 PM | Likes Like |Link to Comment
  • Stocks, Options, Taxes: Part III - Capital Gains And Losses - Basics [View article]
    Attention All Readers: New Information Regarding 2013 Schedule D

    Schedule D has been updated for 2013 to allow an investor to bypass Form 8949 line-by-line reporting if all transactions were reported correctly on Form 1099-B, with basis reported to the IRS. This applies to both Part I (short-term) and Part II (long-term). The totals from the 1099-B are entered directly on Schedule D in this case. If the investor has multiple accounts, and some 1099-Bs are correct, and basis was reported, and some have errors, or transactions with basis not reported to the IRS, I would assume that the 1099-B totals would be entered on Schedule D for the correct 1099-B(s), and Form 8949 would be filled out for the transactions from the 1099-B(s) which had errors, or transactions without basis reported, and the summarized results from Form(s) 8949 would be entered on Schedule D in Parts I and II as in prior years.

    I will post this comment after the 2013 update article VII in the series as well, which focuses on 2013 changes.

    John D. Thomason
    Jan 31 08:43 AM | Likes Like |Link to Comment
  • Stocks, Options, Taxes: Part VII - Update 2013 [View article]
    Attention All Readers: New Information Regarding 2013 Schedule D

    Schedule D has been updated for 2013 to allow an investor to bypass Form 8949 line-by-line reporting if all transactions were reported correctly on Form 1099-B, with basis reported to the IRS. This applies to both Part I (short-term) and Part II (long-term). The totals from the 1099-B are entered directly on Schedule D in this case. If the investor has multiple accounts, and some 1099-Bs are correct, and basis was reported, and some have errors, or transactions with basis not reported to the IRS, I would assume that the 1099-B totals would be entered on Schedule D for the correct 1099-B(s), and Form 8949 would be filled out for the transactions from the 1099-B(s) which had errors, or transactions without basis reported, and the summarized results from Form(s) 8949 would be entered on Schedule D in Parts I and II as in prior years.

    I will post this comment after the third article in the series as well, which focuses on Form 8949 and Schedule D.

    John D. Thomason
    Jan 31 08:40 AM | Likes Like |Link to Comment
  • Stocks, Options, Taxes: Part VII - Update 2013 [View article]
    Thanks for commenting, nickbirnbaum,

    The tax series of articles was somewhat ambitious for a non-professional, but I did turn up a lot of excellent resources that kept me on track. Links to these are provided in the articles. I am continuing to study the topic, and I may write an article or two on IRAs, focusing on Required Minimum Distributions from traditional IRAs, and rules for inherited IRAs. Keeping investors from making mistakes here can be worth more than a bevy of great stock picks, since errors can lead to severe financial consequences.

    Thanks again.

    John D. Thomason
    Jan 22 11:06 PM | Likes Like |Link to Comment
  • Should Investors Hold MLPs In Retirement Accounts? Another Perspective [View article]
    I just did a quick review of Publication 969 and Section 4975, prohibited transactions, and nothing jumps out at me to suggest that a HSA could not invest in units of a publicly traded MLP. Other than the fact that HSAs are much less common than IRAs and would likely be "under the radar", I'm wondering if there is any specific reason that has escaped my admittedly brief review that is driving your choice to invest in an MLP in your HSA?

    John D. Thomason
    Dec 18 09:25 AM | Likes Like |Link to Comment
  • Stocks, Options, Taxes: Part VI - Options And Tax Straddles, Covered Calls [View article]
    Hi, wkirk500,

    Thanks for acknowledging the link. I'm probably not as cognizant of tax-advantaged investments as most since at this point most of my funds are in IRAs. Later on, when I start withdrawing & redepositing into taxable accounts, per Required Minimum Distributions (RMD), I will likely start paying more attention.

    John D. Thomason
    Dec 13 09:40 AM | Likes Like |Link to Comment
  • Stocks, Options, Taxes: Part VI - Options And Tax Straddles, Covered Calls [View article]
    Update - ROC distributions from CEFs

    Apparently CEF ROC is treated just like a stock ROC. See link to Zack's article, which explains it very succinctly:

    http://bit.ly/18pLgBX

    John D. Thomason
    Dec 13 09:03 AM | Likes Like |Link to Comment
  • Stocks, Options, Taxes: Part VII - Update 2013 [View article]
    Thanks for the encouragement. I have believed for some time that taxes are "the elephant in the room" affecting investment returns. Further, it is all too easy for the uninitiated to inadvertently enter into positions which trigger unexpected tax complications. As we have seen with the new form 8949, which was introduced in 2011, the IRS is going to be more, not less, focused on investor tax compliance in future years.

    John D. Thomason

    Dec 12 12:32 PM | Likes Like |Link to Comment
  • Stocks, Options, Taxes: Part VI - Options And Tax Straddles, Covered Calls [View article]
    Hi, wkirk500,

    I assume you noticed that I just put out an update to the original six articles. I mention that since your comment is attached to one of the articles from last January. Regarding ROC distributions, also termed non-dividend distributions, my understanding of the rules is they are not taxable when received, but reduce the cost basis. If ROC distributions over time have reduced the cost basis to zero, the excess ROC is then reported as capital gain, LT or ST, depending upon how long the shares were held. Hard to see how it could ever be ST in this case, but that is straight from Publication 550. I assume the shares of a CEF are handled that way, just as any other stock. Let me know if I have this wrong.

    In my update, I reiterated that the rules for determining whether dividends are qualified or not remain as before - there was initially some misinformation that the qualified distinction was moot, but that is definitely not the case.

    One thing I learned in my research for the series is that there is a lot of misinformation / confusion regarding taxes out there, and very little in the way of clarification from the IRS. The marginally intelligible Publication 550 is all we have to go on, other than reading the IRS code directly. That would fall into the category of "don't try this at home" for most individuals.

    Thanks for commenting.

    John D. Thomason
    Dec 12 11:42 AM | Likes Like |Link to Comment
  • Why It's A Mistake To Hold Cash In This Market [View article]
    Excellent article, as always. The quote from Barry Goldwater's 1964 campaign comes to mind, "In your heart, you know he's right".

    Josh Peters, editor of the Morningstar Dividend Investor newsletter, my top advisory newsletter recommendation, agrees. He stays fully invested in his model portfolios, and whenever cash builds up enough (from dividends) to justify paying a commission, re-invests the funds in the best choice available at that point, that meets his criteria and complies with his weighting parameters.

    John D. Thomason
    Dec 12 09:35 AM | 4 Likes Like |Link to Comment
  • REIT Interest-Rate Concerns May Be Overblown [View article]
    I concur with most of the article, except the limitation of REITs to only 3% to 5% of a total portfolio. This seems low, especially for an income investor, and implies that REITs have more risk than I believe is warranted, assuming holdings are limited to large-cap top quality property REITs. My own limit is 15%. If one moved out of these names as valuations soared, which I did, albeit too early, now is a great time to get back in. I sold HCN and O for nice gains at what seemed like over-valued levels, then watched in amazement as they soared from there. Then, as they came back to earth, I slowly, incrementally, bought back in. Other than selling too early and also starting back in a little too early, I think I have gotten it mostly right with these two, and I am happy to be back in at these levels. I will add a bit more if they take another leg down; otherwise, will hold and collect the dividends.

    John D. Thomason
    Dec 6 11:14 AM | 1 Like Like |Link to Comment
  • REITs And Rising Rates, What A Fool Believes [View article]
    Agree with your approach and recommendations. Factoid's article was also very informative, and the point of view worth considering. I have recently re-acquired HCN, HCP, and O during the recent swoon, and added to DLR. I have considered VTR also, & may start a position soon. But I really do not want to get much over 15% allocated to REITs, or any one sector, no matter how enticing. That's why Factoid's article is probably very timely in my case. Like you, I really cannot see why the REIT sell-off should be happening, and when almost nothing else presents much value today, it would be very easy for me to overweight REITs. I just wonder if I'm not seeing something that the market is seeing. Anyway, keep observing and writing, we'll see over the next few months how great this opportunity was, or wasn't.

    John D. Thomason
    Dec 5 10:22 AM | Likes Like |Link to Comment
  • Stocks, Options, Taxes: Part V - Options [View article]
    Thanks! I'm currently taking the H&R Block Basic Tax Course. I was pretty well informed on taxes & investments, I believe, but there are a lot of areas that had not applied to me personally that I was not well versed in. I am enjoying the course and learning a lot. I plan to come out with an update article (just one, this time) in January, focusing on changes since the original series came out. One change is that the basis reporting requirement on options has been delayed by a year, to tax year 2014, probably because brokerages needed more time to update their systems.

    John D. Thomason
    Nov 28 10:00 AM | Likes Like |Link to Comment
  • Don't Fight The Tape: U.S. REITs In Decline [View article]
    Excellent, thought-provoking article. It certainly has generated a lot of discussion. I have re-started or added to positions in O, HCP, HCN, and DLR during the recent swoon, as the yields became compelling. Actually, I had previously sold out of all except DLR (unfortunately) as the prices were getting up to ridiculous levels some months ago. I have gone back in as these names became available at more reasonable levels, cautiously and incrementally, which is a good thing, as the prices have dropped more than I expected. In fact, I'm only going to allow myself one more incremental buy on O, HCP, & HCN, and only upon a substantial decline below today's levels. I'll be ok with it if they never get there. As for DLR, I added at $50 and change, and then put a hold on adding more, too much volatility with that one. I plan to hold all these REITs for a very long time and collect dividends. But I will admit that, per your article, what seemed like tremendous bargains when they first became available don't seem so world-beating now. Live & learn.

    John D. Thomason
    Nov 27 01:44 PM | 1 Like Like |Link to Comment
COMMENTS STATS
301 Comments
181 Likes