Toshiaki Minamiyama is a successful business executive. Over the years, he has allocated a portion of his large salary to the building of an investment portfolio. He currently has a net worth of $800,000 (exclusive of retirement plans), as follows:

Minamiyama seldom trades his investments, as his strategy is to hold various types of investments for a long time in order to delay any tax that may occur on their disposition.(He is in the 45% tax bracket.) In fact, he chose not to dispose of any investments when he needed money to purchase his house and sailboat.
Required:
From a tax planning perspective, what would you recommend he do in order to enhance his wealth accumulation? If possible, quantify how he would benefit from your recommendations, assuming a five-year time period.

Transcribed Image Text:

Personal assets Automobiles S30,000 29,000 220,000 Sailboat ouse Investment assets Corporate and government bonds (average interest return-10%) Common shares of public corporations Rental real estate 200,000 306,000 360.000 1,145,000 Liabilities First mortgage on house (interest at 9%) Term financing on sailboat (12%) First mortgage on rental real estate (10%) (150,000) (15,000) (180,000) S 800.000 Net worth