Chapter 13 14 and 15 and 16

Chapter 13
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I have no questions for Chapter 13.
Chapter 13 is a wonderful chapter about retirement and deferred compensation.

Historically, much a quarter in America had a defined benefit plan, but within the last 40
years, that became increasingly more and more transitioning to a defined contribution
plan one of the most popular examples being the 401(k).
Currently many of these types of plans are both age and income limited and require
minimum or maximum threshold to contribute and maximum ages to begin required
distributions. I would argue that when the retirement age was 65 and the average life
expectancy of an American was 59, Social Security and defined benefit plans made
significantly more sense than they do now. However, Americans are living until their
late 70s and wanting to retire earlier.
Additionally, taxpayers are having fewer children and thus fewer workers to support
more retirees. The result is an unnecessary strain on Social Security, and historically
very important social safety net as well as significant difficulty in pension programs weir
returns and distributions are not keeping up with company contributions.
The result is an imbalance in these retirement plans and a short fall to either the
company or a reduction in living standard to the beneficiary. A solution could be to
encourage additional and significantly larger contributions to the defined contribution
plans like the 401(k) with increasingly greater tax favorability for these plans.
While some would say that it's unwise to allow workers to invest in the stock market, a
compromise could be similar to what one sees with 529 plans that are age-appropriate
risk-adjusted.
My fundamental belief is that the free market historically generates returns that are up
and to the right. Employees are not choosing to stay with employers for their working
lifetime and thus it is becoming increasingly less the responsibility of the employer to
provide retirement benefit to the employee post career.
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Chapter 14

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As I've said before a previous posts, US tax policy tends to be a direct result of our
federal governments desires to drive and reward certain behaviors. This statement
continues to be true, I believe throughout chapter 14.
Here we learn about the tax consequences (and benefits of homeownership) for many,
owning a home is the single greatest asset and source of net worth that a taxpayer will
ever acquire.
Largely after World War II, the federal government desire to encourage homeownership
as a means of societal stability. They (the federal government) did this through several
methods and perhaps the greatest tax benefit of homeownership has historically been
the mortgage interest deduction which is largely a transfer payment from renters to
home owners. Additionally, in recent years, the government has encouraged this
concept of homeownership and upward mobility by rewarding taxpayers with the ability
to retain certain proceeds limited in amount upon the sale of one home. This is
generally meant to dry the behavior of trading up overtime allowing for more upward
mobility and new home owners to enter the market.
Also discussed in this chapter are the two ideas of home office tax deductions and
vacation rental tax deductions.
The Internal Revenue Service generally takes a dimmer view (meaning that they require
additional scrutiny) of taxpayers utilizing their residence or portion of their residence as
a home office. This is generally done to dissuade taxpayers from being overly generous
with their primary residence under the auspice is of a home office.
Another sort of similar concept is the idea of a vacation rental deduction. The tax code
provides for certain restrictions to minimize taxpayer manipulation of vacation homes
"purchased" for real estate investment purposes. Both of these concepts generally incur
greater scrutiny since they have historically been two of the more abused tax
deductions related to homeownership.
While I understand the additional scrutiny, it might make sense to revise both of these
tax concepts to reflect the present reality that more and more jobs provide for remote
work and thereby allowing for individuals to be more selective in their geographic
location while the same time trying to grow their asset base.
Chapter 15

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Chapter 16

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Chapter 13

Practice Quiz: INSERT

I have no questions for Chapter 13.

Chapter 13 is a wonderful chapter about retirement and deferred compensation.

No reply as I submitted response first.

Practice Quiz: INSERT

I have no questions for Chapter 14.

No reply as I submitted response first.

Practice Quiz: INSERT

I have no questions for Chapter 15.

No reply as I submitted response first.

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I have no questions for Chapter 16.

No reply as I submitted response first.

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