Type of Publication: | Journal article |
Publication status: | Published |
Author: | Fischer, Marcel; Gallmeyer, Michael |
Year of publication: | 2017 |
Published in: | Review of Finance ; 21 (2017), 5. - pp. 1847-1873. - ISSN 1572-3097. - eISSN 1573-692X |
DOI (citable link): | https://dx.doi.org/10.1093/rof/rfw047 |
Summary: |
We study the impact of the different tax treatment of capital gains and losses on the optimal location of assets in taxable and tax-deferred accounts. The classical result of Black (1980) and Tepper (1981) suggests that investors should follow a strict pecking order asset location rule and hold those assets that are subject to the highest tax rate preferentially in tax-deferred accounts. We show that with the different tax treatment of realized gains and losses, only tax-efficient equity mutual funds are optimally held in taxable accounts, whereas mutual funds with average tax-(in)efficiency are preferentially held in tax-deferred accounts.
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JEL Classification: | G11; H24 |
Subject (DDC): | 330 Economics |
Bibliography of Konstanz: | Yes |
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FISCHER, Marcel, Michael GALLMEYER, 2017. Taxable and Tax-Deferred Investing with the Limited Use of Losses. In: Review of Finance. 21(5), pp. 1847-1873. ISSN 1572-3097. eISSN 1573-692X. Available under: doi: 10.1093/rof/rfw047
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