Month: June 2023

At nearly the midway point of the year, the S&P 500 Index has proven surprisingly resilient despite numerous headwinds, such as multiple Fed rate hikes and instability in the banking system.  However, the S&P 500’s rally doesn’t necessarily match what’s going on inside diversified equity portfolios.  While the S&P 500 is up 12%, 7 stocks – Alphabet, Amazon.com, Apple, Meta Platforms, Microsoft, NVIDIA, and Tesla – are up an average of 69.0 percent! The rest of the stocks in the S&P 500 are up only 2.5%, on average.  It goes without saying that this is a whopping disparity. Investors with diversified portfolios [need patience] during this period of narrow leadership. We’re already seeing signs that market performance is starting to broaden out.

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There is a wrinkle in the federal tax code that can help heirs avoid or reduce taxes on inherited assets, which is known as "step-up in basis". A capital gain happens when you sell an asset for more than what it initially cost. A step-up in basis takes into consideration the fair market value of an asset when it was inherited rather than when it was acquired. This means there’s a “step-up” from the original value to the current market value. Conversely, if someone gives a gift to somebody during their lifetime, the recipient retains the basis of the person who made the gift, which is known as a “carryover basis.” Click below for more detail including some examples.

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