appreciation - a taxable-account feature, not an IRA one
Correction after user pushback. The earlier note "ROC does not help
the taxable case - the deferral replicates the IRA" was WRONG: a
traditional IRA defers to the ORDINARY rate at withdrawal, while ROC
in a taxable account defers to the LTCG rate on a >1y sale (the
distribution is basis-reducing and reappears inside the shareholder's
own capital gain). Under the premise LTCG rate < future ordinary
rate, ROC - like NAV appreciation - favors the taxable account.
Contrast ordinary income (interest, ordinary divs, STCG): taxed at
the ordinary rate in BOTH accounts, so only the IRA's deferral wins.
taxplan.py:
- _deferred_share(): per fund, share of 5y total return that defers
to the investor = (NAV change + ROC) / total return, from the
parsed per-share N-CSR table, max'd with the taxsplit appreciation
share.
- >= 50% deferred -> location "TAXABLE (defers to LTCG)" (renamed
from "TAXABLE (accrues)"); 10-50% ROC in distributions -> note.
- Merger-arb cap 0.35 -> 0.50: HMEZX's per-share table (52% NII /
30% gains / 18% ROC over 5y) refutes "mostly STCG" - HMEZX/MERVX
are now MIXED (check 1099), not clean IRA.
- RESEARCH.md: corrected placement write-up, incl. the distinction
between the tax question and the fund-quality question (heavy ROC
can mean principal erosion - PGSIX NAV -34%/5y - which affects
selection, not the optimal account).
App: order dict + filter updated to the new location name.
Tests: merger-arb expectation updated to MIXED; 2 new checks for
the ROC upgrade/note logic. 99/99 fundlab + 32/32 app.
Follow-up to the tax-location plan: the taxplan score only measured
DISTRIBUTION character. The user rightly noted that NAV appreciation
is also a capital gain (LTCG on a >1y sale). The fund price files
carry both series - Close = raw NAV with distributions paid out,
Adj Close = total return reinvested - so the split is computable
directly per fund (5y window + most-recent-12m payout).
Findings:
- ACCUMULATORS (>=50% of 5y return is price appreciation) get a new
location "TAXABLE (accrues)": MBXIX 76% (0% payout 12m), ATESX 66%,
LAMHX 62%, CVSIX 61%, candidate PBAIX 60% (0% payout 12m). For
these the taxable account's LTCG-on-sale benefit is the dominant
tax event.
- PAY-OUT funds: HMEZX (99% of return distributed - the STCG merger-
arb case), MERVX, COSIX, PMORX, SVARX, SCFZX, DMSZX, munis, credit.
IRA placement stands.
- Data artifacts caught: JLPSX/QSPNX one-time NAV gap events ~2022
(special distribution or reorg) skew the 5y payout average; the
12m payout column reflects current behavior. QCMMRX (MMF) series
is not NAV-based - flagged.
App: tax-location expander gains 5y price / 5y payout / 12m payout
columns and the "TAXABLE (accrues)" filter. RESEARCH.md documents
the capital-loss question: registered RICs cannot distribute net
capital losses; the usable benefit is the fund's internal harvest
reserve (low capital-gain distributions after up-years), which needs
N-CSR/1099 history to verify. 97/32 suites green.
fundlab/taxplan.py categorizes the 16-fund shortlist, the 22 N-PORT
cross-checked candidates, and all 250 screened candidates by the
expected CHARACTER of their distributions, given the user's premise
that the current LTCG rate < the post-retirement ordinary rate:
qualified div + LTCG -> TAXABLE (score >= 0.60)
tax-exempt (munis) -> TAXABLE
ordinary / STCG / REIT -> IRA (score <= 0.35)
in between -> MIXED (pull the 1099-DIV)
cash -> FLEXIBLE
score = estimated share of distributions that are tax-favorable,
from three tiers of ground truth: N-PORT keyword buckets (16), SEC
assetCat/issuerCat buckets (22), sleeve loadings (250), with a
sleeve fallback when the keyword parser left >50% of a book
unclassified, and a manual override for the Leuthold wrappers
(91.7% Leuthold Core ETF, no return history yet).
Key findings:
- shortlist: TAXABLE = ATESX, JLPSX, LAMHX, LCORX, LCRIX (equity);
IRA = ATRFX, COSIX, CVSIX, PMORX, SVARX, EAGMX/EGRSX;
MIXED = MBXIX, QSPNX, PMAIX/PMFKX (same fund, two classes)
- cross-checked: 4 munis -> TAXABLE; HMEZX + MERVX are the merger-
arb trap - equity-looking books whose distributions are mostly
SHORT-TERM gains -> IRA
- candidates: 109 munis TAXABLE, 127 IRA, 6 equity TAXABLE, 7 MIXED
App: Fund Lab "Tax location" expander. Output:
fundlab/taxplan_results.json. Tests: test_taxplan() (9 checks).
97/32 suites green.
