As I wait for the last three dividends of 2017 to post to my account, my final accounting report will delayed into next week. Sure I could just accrue said dividends and release the report but where would the fun in that be? Especially since I can lay claim to being the first official victim of the new tax plan, aka the Tax Cuts and Jobs Act of 2017. As it’s not even effective yet, I guess this is the first – of probably many – unintended consequences to emanate from this bill. This week I’ll also cover my last minute 2017 moves and my first 2018 activity. But first …
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BATON ROUGE, La., Dec. 27, 2017 (GLOBE NEWSWIRE) — Lamar Advertising Company announces that as a result of changes in the tax code due to the recent passage of the Tax Cuts and Jobs Act of 2017, its board of directors approved changing the payment date of its fourth-quarter dividend on its Class A common stock and Class B common stock to January 2, 2018. The dividend was previously scheduled to be paid on December 29, 2017. Management and the board determined that, as a result of such changes to the tax code, it was prudent to delay payment of the dividend until calendar year 2018.
The first question is prudent for whom? My guess is the top dogs (management and board) is the answer. It certainly isn’t this lowly little shareholder as this dividend will be taxed at a higher rate in 2018 for me. As the benefits of the new plan accrue from the top, I guess it’s only fitting that the wealthy continue to change the rules of the game – at the 11th hour – to their benefit.
This was only the beginning as this dividend was credited (inappropriately) to my account on December 29th. The broker uses a platform owned by Bank of New York Mellon (BK) so my assumption is it is a BK error. Now the cause needs to be identified (costs), the transaction reversed (more costs) and reapplied effective January 2nd. Further, since it is year end a potential reversal is required for pending 2017 tax reports. BK will likely take a 2018 earnings hit on this error (albeit minuscule) due to either greed or a gaming attempt on the system.
I suspect this is the first – but not the last – potential gotchas which in turn will reduce anticipated benefits triggered by the bill.
My End Of Year Activity
My efforts to game the system were twofold:
- Made an early mortgage payment (billed but not due) to ensure the full deduction. I have some uncertainty as to whether the mortgage interest is within or in addition to the new standard deduction
- Maxed out the IRA contribution. It appears this was a overly cautious move but wanted to ensure any possible retroactive move regarding 2017 contributions made in 2018 were not applicable (bird in hand, so to speak).
The one move not made was accelerating property tax payments. Although a possible move, in our case we are eligible for beneficial treatment due to age and disability. The benefit is quarterly (rather than annual) payments which is essentially an annual interest-free loan for thousands of dollars. In my opinion, the risk of losing this (or angst in reinstating) outweighed any short-term benefits derived.
Front Loading 2018
I ended the year with three open limit orders:
- Royal Bank of Canada (RY) – an addition to the IRA which (broker confirmed) is an issue exempt from Canada’s 15% tax withholding via tax treaty. Once executed (and post ex-dividend) I will eliminate my taxable (subject to withholding) RY holding.
- Compass Group plc (CMPGY) – a new portfolio addition, UK based with some US exposure. I believe there will be some ongoing residual weakness in regards to Brexit.
- Nexeon MedSystems, Inc. (NXNN) – my current speculative toy. Extreme volatility is the game here so perhaps a low ball offer may get executed to further reduce my cost basis.
My intention is not to significantly add positions this year although I have 12 more that I am watching.
My goals remain the same (as usual), to exceed the performance of the S&P index (whether up or down) and beat the dividends earned in 2017. All else is icing on the cake! On deck (Jan/Feb in no particular order) will be the annual review, geographic diversity assessment, sector allocation and a review of the results (so far) of my thematic investing.
I wish you all a successful and prosperous New Year!