Et Tu, Costco?

Today and tomorrow, we’ll be publishing excerpts from the latest Hewins Financial President’s letter, including a look at upcoming tax code reforms and the fiscal cliff.

Let’s be clear; we are here to help you maximize your after-tax return. It is not for us to opine on tax policy, per se, but it is our job to assist you in seeking the best deal you can get, within the law, of course.

As a guy who started shopping at The Price Club in Redwood City, CA a long time ago, and who has continued shopping at Costco (which acquired The Price Club) ever since, I guess I am not surprised that the Board recently decided to borrow $3.5 billion and issue a special dividend to the stockholders before year-end. They certainly focus on every penny, and this is not a small thing. The Wall Street Journal estimates the co-founder and former CEO, Jim Sinegal, will save $4 million in taxes, compared to what he would probably pay under the new, higher rates that he supports.

See WSJ Article: “Costco’s Dividend Tax Epiphany”.

Jim supported tax increases very publicly, but nevertheless is avoiding them personally to the extent he can. This should surprise no one, as we observe this behavior every day. Which brings us to our first and most important point:

Please make sure to speak to your CPA and your financial planner right away regarding what you might do before the end of December in response to the likely changes in the tax code.

While we do not know exactly what the new tax code will look like, we believe it is now safe to assume that taxes will be substantially higher. There are many opportunities for businesses and individuals to pay taxes at 2012 rates and save money. It is certainly worth having a conversation.

If you have questions or would like more information please call us. We are here to help.

Costco has company; lots of companies are borrowing to pay dividends to owners ahead of this big change:

See WSJ Article: Firms Flood Bond Market to Finance Payouts.

Hewins Financial Advisors, LLC d/b/a Wipfli Hewins Investment Advisors, LLC (“Hewins”) is an investment advisor registered with the U.S. Securities and Exchange Commission (SEC) under the Investment Advisers Act of 1940. Hewins is a proud affiliate of Wipfli LLP. Information pertaining to Hewins’ advisory operations, services and fees is set forth in Hewins’ current Form ADV Part 2A brochure, copies of which are available upon request at no cost or at www.adviserinfo.sec.gov. The views expressed by the author are the author’s alone and do not necessarily represent the views of Hewins or its affiliates. The information contained in any third-party resource cited herein is not owned or controlled by Hewins, and Hewins does not guarantee the accuracy or reliability of any information that may be found in such resources. Links to any third-party resource are provided as a courtesy for reference only and are not intended to be, and do not act as, an endorsement by Hewins of the third party or any of its content or use of its content. The standard information provided in this blog is for general purposes only and should not be construed as, or used as a substitute for, financial, investment or other professional advice. If you have questions regarding your financial situation, you should consult your financial planner, investment advisor, attorney or other professional.

Roger Hewins

President

Roger Hewins is the President of Hewins Financial Advisors, based in North Palm Beach, FL. Roger has more than 30 years of experience in investment management, helping bring the sophisticated financial advice typically reserved for large institutional clients to everyday investors, from high-net-worth individuals and families to small businesses and retirement plans.