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What is tax-loss harvesting and is it worth doing?
Answer: Tax-loss harvesting means selling investments at a loss in taxable accounts to offset capital gains and potentially reduce other taxable income. It can be worthwhile when tax savings outweigh trading costs and investment disruptions. Benefits depend on your tax situation; observe wash-sale rules, which restrict deductions when substantially identical securities are purchased 30 days before or after the sale.
By Edward Papier, CIMA, CF2, CM&AA · Last updated November 5, 2026
What is the wash sale rule?
The wash sale rule disallows a loss if you buy the same or a substantially identical security within 30 days before or after selling it at a loss. The disallowed loss is added to the cost of the new shares, so it is delayed rather than lost. The rule also applies to purchases in your IRA and, generally, your spouse's accounts.
How much of a capital loss can I deduct?
Capital losses first offset capital gains, without limit. If losses exceed gains, you can deduct up to $3,000 a year against ordinary income, or $1,500 if married filing separately. Any remaining loss carries forward to future years indefinitely, so a large harvested loss can offset gains for years to come.
Does tax-loss harvesting work in an IRA?
No. Gains and losses inside an IRA or 401(k) have no current tax effect, so there is nothing to harvest. Tax-loss harvesting applies only to taxable brokerage accounts. Selling at a loss in a taxable account and buying the same security in your IRA within 30 days can also trigger the wash sale rule.
Talk to us
To talk through your own situation, please call 212-697-3930, email ep@amadeuswealth.com, or schedule a meeting at calendly.com/ep-awa.
Edward Papier, CIMA, CF2, CM&AA
President, Amadeus Wealth Alternatives, Hackensack, NJRelated questions
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What is a donor-advised fund and should I use one?
Answer: A donor-advised fund is a charitable account administered by a sponsoring charity. You make an irrevocable contribution, potentially receive a charitable deduction, and recommend investments and grants over time; the sponsor retains legal control. Consider one to organize ongoing giving or contribute appreciated assets, while weighing fees, deduction limits, and the permanent commitment to charity.
By Edward Papier, CIMA, CF2, CM&AA · Last updated November 5, 2026
What is the difference between a donor-advised fund and a charitable remainder trust?
A donor-advised fund is a simple account for giving: you get a deduction now and recommend grants to charities over time, but you receive no income from it. A charitable remainder trust pays you an income for life or a set term first, and only what remains goes to charity. CRTs cost more to set up but can help with selling appreciated assets.
Donor-advised fund vs charitable remainder trust
Donor-advised fund
Charitable remainder trust
Pays income to you
No
Yes
Tax deduction
Full, when funded
Partial, when funded
Can be undone
No
No
Best for
Simple giving over time
Selling a highly appreciated asset and keeping an income
Can I give appreciated stock to a donor-advised fund?
Yes, and it is often the most tax-efficient way to give. If you have held the stock more than a year, you can generally deduct its full market value and avoid capital gains tax on the appreciation. Many funds also accept private company stock, real estate and other complex assets, though the rules and valuations are more involved.
What is the difference between a donor-advised fund and a private foundation?
A private foundation gives your family full control over grants and investments and can employ family members, but it must distribute about 5% of its assets each year, pay an excise tax and file public tax returns. A donor-advised fund is cheaper and simpler, offers higher deduction limits and more privacy, but the sponsor has final legal control.
Talk to us
To talk through your own situation, please call 212-697-3930, email ep@amadeuswealth.com, or schedule a meeting at calendly.com/ep-awa.
Edward Papier, CIMA, CF2, CM&AA
President, Amadeus Wealth Alternatives, Hackensack, NJRelated questions
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What is an accredited investor?
Answer: An accredited investor meets SEC criteria allowing access to certain private investments. Individuals generally qualify through net worth exceeding $1 million, excluding their primary residence; annual income exceeding $200,000 individually or $300,000 with a spouse or equivalent for two prior years, with similar income expected currently; or certain professional licenses. Other qualifying categories exist.
By Edward Papier, CIMA, CF2, CM&AA · Last updated November 5, 2026
What is the difference between an accredited investor and a qualified purchaser?
Individuals generally qualify as accredited investors with net worth exceeding $1 million, excluding their primary residence, or through income or professional credentials. A qualified purchaser generally must own at least $5 million in investments. Accredited status provides access to many private offerings; qualified purchaser status opens additional private funds.
Accredited investor vs qualified purchaser
Accredited investor
Qualified purchaser
Individual test
$1M net worth excluding home, or $200K / $300K income
$5M or more in investments
Opens
Most private offerings
Funds limited to qualified purchasers
How do you prove you are an accredited investor?
For many private offerings, you simply confirm your status in the subscription agreement. For offerings that advertise publicly, the issuer must take reasonable steps to verify it, such as reviewing tax returns, brokerage statements or a letter from your CPA, attorney or registered investment adviser.
Why do accredited investor rules exist?
Private offerings generally provide fewer required disclosures and investor protections than registered public offerings. Accredited investor rules aim to identify investors who can evaluate the risks and bear potential losses. Critics argue that wealth does not necessarily indicate financial sophistication. In 2020, the SEC partly addressed that concern by allowing holders of certain professional credentials to qualify regardless of income or net worth.
Talk to us
To talk through your own situation, please call 212-697-3930, email ep@amadeuswealth.com, or schedule a meeting at calendly.com/ep-awa.
Edward Papier, CIMA, CF2, CM&AA
President, Amadeus Wealth Alternatives, Hackensack, NJRelated questions
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What is distributions to paid-in capital, or DPI?
Answer: Distributions to paid-in capital (DPI) measures how much a private investment fund has returned to investors relative to their contributed capital. Calculate it by dividing cumulative distributions by paid-in capital. A DPI of 1.5x means investors have received $1.50 for every $1 contributed. It excludes remaining investment value and does not account for timing.
By Edward Papier, CIMA, CF2, CM&AA · Last updated November 5, 2026
What is MOIC in private equity?
MOIC, or multiple on invested capital, compares the total value of an investment, money already returned plus the value still held, to the amount invested. A MOIC of 2.0x means each dollar is now worth two dollars. Unlike DPI, it counts unrealized value, so it shows potential, not cash in hand, and it ignores how long the gain took.
What is the difference between DPI, RVPI and TVPI?
DPI measures cash already returned to investors. RVPI, residual value to paid-in capital, measures the estimated value of investments the fund still holds. TVPI, total value to paid-in capital, is the two added together. Early in a fund's life most of the value is RVPI; by the end, a strong fund's value should be mostly DPI.
Why does DPI matter to investors?
DPI is the only one of these figures that reflects money actually returned. Reported values for unsold investments are estimates, and they can change. Many investors watch DPI closely, especially in older funds, because a fund with a high reported value but a low DPI has not yet proven it can turn that value into cash.
Talk to us
To talk through your own situation, please call 212-697-3930, email ep@amadeuswealth.com, or schedule a meeting at calendly.com/ep-awa.
Edward Papier, CIMA, CF2, CM&AA
President, Amadeus Wealth Alternatives, Hackensack, NJRelated questions
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What are required minimum distributions and when do I have to take them?
Answer: Required minimum distributions (RMDs) are mandatory annual withdrawals from certain retirement accounts. They generally begin at 73, or 75 for those born in 1960 or later. Your first deadline is usually April 1 of the following year; subsequent deadlines are December 31. Some workplace plans allow delays while employed. Roth owners have no lifetime RMDs.
By Edward Papier, CIMA, CF2, CM&AA · Last updated November 5, 2026
How can I reduce or avoid RMDs?
Roth IRAs have no required distributions for the owner, so Roth conversions before RMDs begin can shrink future RMDs. Qualified charitable distributions can satisfy RMDs without adding to taxable income. If you are still working and do not own 5% of the company, your current employer's plan may let you delay its RMDs until you retire.
What is the penalty for missing an RMD?
The penalty is 25% of the amount you should have withdrawn. It drops to 10% if you take the missed distribution and file a corrected return within two years. The IRS can waive the penalty for reasonable error if you fix the shortfall promptly and request relief on Form 5329.
Do inherited IRAs have RMDs?
Often, yes. Most non-spouse heirs must empty an inherited IRA within ten years, and if the original owner had already begun RMDs, annual withdrawals are generally required during those years too. A surviving spouse can usually treat the IRA as their own, delaying RMDs until reaching their own required age.
Talk to us
To talk through your own situation, please call 212-697-3930, email ep@amadeuswealth.com, or schedule a meeting at calendly.com/ep-awa.
Edward Papier, CIMA, CF2, CM&AA
President, Amadeus Wealth Alternatives, Hackensack, NJRelated questions
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What is a qualified charitable distribution, and how does it work?
Answer: A qualified charitable distribution (QCD) lets an IRA owner age 70½ or older transfer funds directly from an eligible IRA to a qualifying charity. Within annual limits, it excludes otherwise taxable distributions from income and can satisfy all or part of your required minimum distribution. You cannot also claim a charitable deduction for the excluded amount.
By Edward Papier, CIMA, CF2, CM&AA · Last updated November 5, 2026
How much can I give through a QCD?
The annual limit started at $100,000 per person and has been indexed for inflation since 2024, so it rises slightly each year. A married couple with separate IRAs can each give up to the limit. A one-time QCD to certain split-interest arrangements, such as a charitable remainder trust, is also allowed, within a smaller limit.
Can a QCD go to a donor-advised fund?
No. Qualified charitable distributions cannot go to donor-advised funds, private foundations or supporting organizations. They must go directly from the IRA to an eligible public charity. If you want to give through a donor-advised fund, consider giving appreciated stock from a taxable account instead.
How do I make a QCD?
Ask your IRA custodian to send the money directly to the charity; a check made out to you does not count. Get a written acknowledgment from the charity. Your custodian will report the full distribution on Form 1099-R, so when you file, report it as a QCD to exclude it from income. Complete it by December 31 to count for that year's RMD.
Talk to us
To talk through your own situation, please call 212-697-3930, email ep@amadeuswealth.com, or schedule a meeting at calendly.com/ep-awa.
Edward Papier, CIMA, CF2, CM&AA
President, Amadeus Wealth Alternatives, Hackensack, NJRelated questions