What is Form 1045: Application for a Tentative Refund?

IRS Link to Form — Found Here Form 1045 can be used to apply for a refund that might carry-back of up to 5 years, if an individual or trust has overpaid on their taxes, finds Net Operating Losses (NOL), or has section 1256 losses to carry-back. The 1045 is meant to be the quickest way to get a carry-back refund. Net Operating Losses from a pass-through entity or business can be carried back up to 5 years now, according to updates to IRC 172(h). Section 1256, which applies to futures contract investing, will allow a carry-back of losses in a 3-year time frame. For such carry-backs, the standard filing is IRS Form 1045. Continue reading...

What is a Living Trust?

A living trust describes a trust designed to transfer assets to beneficiaries upon the death of the owner/grantor, which is established during the life of the grantor. They can take several forms, but most common ones are categorized as either revocable or irrevocable. Living trusts have a similar effect to a Last Will and Testament, both being legal documents that stipulate how the decedent would like property to be divided amongst beneficiaries upon the death of the owner or grantor of the trust. Continue reading...

What is a Living Will? (in-depth)

A living will is sometimes called an advance directive or a medical directive, and it specifies a person’s wishes regarding life-prolonging medical procedures and other end-of-life issues. If a person is in a coma, for instance, it is intended to provide instructions for their care, including whether or not to use oxygen or “feeding tubes” to keep them alive. This might require a Do Not Resuscitate (DNR) waiver of some kind, which tells medical staff not to intervene if the person is dying. The living will is different than the “will” that most people are familiar with, which is a Last Will and Testament, stipulating the person’s wishes for their estate after he or she has died. Continue reading...

How do Bitcoin Transactions Work?

How do Bitcoin Transactions Work?

Two words: blockchain technology. Transactions in bitcoin are encoded, packed into a block of other transactions, and all of these are sent out to thousands of computers running blockchain computations, known as hashes. All of these computers are running similar algorithms designed to force honest work and to take time for the computers to complete. The purpose of this step is merely forcing the blockchain to require time, energy, and effort, and to be randomized and decentralized when it is validating transactions. Whichever computer solves it first receives an incentive reward, and the entire blockchain, comprised of all computers running bitcoin client software, then updates the ledger to include the most recent validated transactions. Continue reading...

What is Corporate Equity?

What is Corporate Equity?

Corporate equity is retained earnings plus common shares outstanding. On a corporate balance sheet, the retained earnings and the outstanding common stock capitalization combined would be considered the corporate equity, also called shareholder’s equity / owner’s equity. Of the total corporate equity, the portion representing common stock equity is only the capital raised through the issuance of shares in an IPO (initial public offering), where payment for those shares was paid to the company. Subsequent trading in those shares does not affect the common stock equity on the company books. Continue reading...

What is an A-note?

What is an A-note?

An A-note describes a slice of the top tranche of an asset-backed security. Asset-backed securities are categorized into tranches for quality, and an A-note is a share of the best available tranche. Asset-backed securities include Collateralized Mortgage Obligations (see — CDOs), Mortgage-Backed Securities, Credit Card Debt, and other kinds of cash flows, especially related to debt instruments that have been pooled and sold to investors. This shifts the risk from the lending institution to the underwriters and investors in the asset-backed security. Continue reading...

What is a short sale?

What is a short sale?

A short sale is the sale of a security not owned by an investor, which the investor has borrowed from the broker in order to sell. An investor can use his broker to give him the ability to sell shares that he does not have in his inventory. The investor believes that the stock price will be lower in the near future, and will replace the borrowed shares by purchasing them at the (possibly) lower price in the future. Continue reading...

What was the “Tulip” Bubble?

Markets have been around for much longer than most people think. The Tulip bubble happened in the 1500's! In the last decade of the 1500’s, Tulips were brought to Holland from Constantinople by botanist Carolus Clusius. Within a few years, the Tulips began to spread through Holland like wildfire, becoming luxury goods. As demand rose to astronomical levels, prices skyrocketed along with it. Eventually, people would gain and lose entire fortunes on the beautiful (but not that beautiful) plants. Of course, the actual value of the tulip bulbs was nowhere near the thousands of dollars (if the amounts were converted into today’s standards) that the traders paid for them. Eventually, people began to sell their invaluable tulip bulbs for real cash, and a domino effect ensued. Continue reading...

Do I Need a more Specialized Financial Advisor?

Some advisors have practices that focus on specific types of investments or niche markets. If your investment portfolio seems to be lacking a particular area and you are not confident that your current advisor or you yourself can take on the challenge of incorporating the changes you desire, then you may want to speak with a more specialized advisor in that particular area. Similarly, some advisors focus on specific types of clients, such as medical professionals, and if such a category suites you then you may find that your needs are best met by someone who deals with people like you most often. There are some designations and certifications that advisors can earn beyond the standard ones, which may cause them to be sought out on certain topics or investments. Continue reading...

What is Operating Leverage?

Operating leverage is a measure of how critical each sale of a company is to overall cash flow. If a company has high operating leverage, it means that it relies on fewer sales with very high gross margins, versus a company with low operating leverage that experiences higher levels of sales with lower gross margins. As an example, a convenient store has less operating leverage than a business that sells yachts. Continue reading...