Series 65 › Clients › Tax Considerations › Synthesis Tax Considerations: Synthesis
This unit covered three major areas of tax knowledge tested on the Series 65 exam: individual income tax, entity and trust taxation, and wealth transfer tax. Use these reference tables to reinforce the key distinctions and numbers.
Key Numbers Reference
Item Amount/Rate Long-term capital gains rates 0%, 15%, or 20% Max ordinary income rate 37% Net Investment Income Tax (NIIT) surtax 3.8% (modified adjusted gross income above $200K single / $250K married filing jointly) Net capital loss against ordinary income $3,000/year ($1,500 married filing separately) Qualified dividend holding period More than 60 days in 121-day period Federal tax brackets 10%, 12%, 22%, 24%, 32%, 35%, 37% Required minimum distribution (RMD) starting age 73 (born 1951-1959) or 75 (born 1960+) Missed RMD penalty 25% (reduced to 10% if corrected within 2 years) Alternative Minimum Tax (AMT) rates 26% and 28% Income-Related Monthly Adjustment Amount (IRMAA) threshold (2026) $109,000 single / $218,000 married filing jointly (2-year lookback) C-corporation tax rate 21% flat Trust top bracket threshold ~$15,450 REIT minimum distribution 90% of taxable income Estate tax exemption (2026) $15,000,000/individual Annual gift exclusion (2026) $19,000/recipient Gift splitting (married) $38,000/recipient Estate/gift tax top rate 40% Portability (married couple) Up to $30,000,000
Capital Gains Decision Framework
Situation Tax treatment Held 1 year or less Short-term: ordinary income rates (up to 37%) Held more than 1 year Long-term: preferential rates (0%, 15%, 20%) Net capital loss after offsetting gains Deduct up to $3,000/year against ordinary income Unused capital loss Carry forward indefinitely Sold and repurchased within 30 days Wash sale: loss disallowed, added to new basis Inherited asset Stepped-up basis: embedded gains eliminated Gifted asset Carryover basis: embedded gains preserved
Entity Taxation Quick Reference
Entity Taxation Level Double Tax? Pass-Through? C corporation Entity + shareholder Yes No S corporation Shareholder only No Yes Partnership/LLC Partner/member only No Yes REIT Shareholder (if 90%+ distributed) No (if compliant) Yes Trust (simple) Beneficiary (on distributed income) No Yes Trust (complex) Trust and/or beneficiary Possible Partial
Exam Question Framework
When you see a tax question, ask yourself:
What type of income? Ordinary income, qualified dividends, short-term capital gains, or long-term capital gains each have different ratesWhat is the holding period? More than 1 year = long-term = preferential ratesWhat entity holds it? C-corp = double tax, S-corp/partnership/MLP = pass-through, REIT = ordinary income dividends, trust = compressed bracketsIs there a basis issue? Inherited = step-up, gifted = carryover, wash sale = disallowed loss added to new basisAre there planning implications? IRMAA (2-year lookback), AMT (ISOs, private activity bonds), RMDs (age 73/75), gift vs. hold until death