Letter No. 5 is a subscriber issue.
The first issue behind the wall: tax quickies, business quickies, the money corner with this week's numbers, and the essay — The Tax Bill Inside the Repricing.
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Tax Quickies
September 15: third estimated payment
Q3 estimates for individuals are due Sep 15. The safe harbors are unchanged in character under OBBBA — 90% of this year or 100/110% of last year (110% when prior-year AGI topped $150,000). If a repricing hit the account funding the estimates, compute from the prior year, not the panic.
Trump Accounts: Treasury proposes the investment rules
Treasury's Aug 20 proposal would set low-cost investment options for the newborn savings accounts created last year. No tax action needed today; watch what counts as a "qualified investment" before anyone pitches a product around it.
The penny is gone — round the books
Penny production ceased in December. Cash transactions now round to the nickel at the register, but books and returns still keep exact cents. The gap is bookkeeping, not tax — until someone "rounds" a Form 1040 line. Don't.
Fall withholding check-up
Two paychecks stand between now and year-end withholding. A September W-4 adjustment is the cheapest tax move an employee can still make for 2026 — October's is half as useful.
Business Quickies
QBI is permanent — plan like it
Section 199A no longer sunsets. Pass-through owners can build multi-year compensation and entity structures on a floor that doesn't expire, instead of re-planning every December against a deadline Congress kept moving.
R&D expensing: the look-back window is open
Domestic research expensing was restored — and prior-year positions that capitalized under the old §174 regime may carry refund opportunities on amended returns. If the business spent on domestic R&D in the capitalization years, the file is worth reopening.
October 15 is the real deadline stack
Extended returns, final SEP-IRA contributions for the self-employed, and the last clean Q4 planning conversation all land the same mid-October week. Calendar it backward from Sep 15, not forward from Jan 1.
The Money Corner
The long bond is doing the talking. The 30-year Treasury closed the week at 5.27% against 4.74% on the 10-year — a long-end premium the market charges to fund the capex cycle. As Letter No. 4 traced, discipline is arriving through the financing door: when capital is available at a price, the price is the story. For households, the same discipline shows up at the mortgage desk: 6.65% for thirty years, 5.95% for fifteen. The 70-basis-point spread between the two is the price of patience — priced weekly, decided once.
| The Numbers | Yield | Source · as of |
|---|---|---|
| 2-Yr Treasury | 4.24% | Treasury · Aug 21 |
| 10-Yr Treasury | 4.74% | Treasury · Aug 21 |
| 30-Yr Treasury | 5.27% | Treasury · Aug 21 |
| 15-Yr Mortgage (FRM) | 5.95% | Freddie Mac PMMS · Aug 20 |
| 30-Yr Mortgage (FRM) | 6.65% | Freddie Mac PMMS · Aug 20 |
| AAA 10-Yr Muni | — | Editor's desk · weekly entry |
Treasury par yields, daily; Freddie Mac Primary Mortgage Market Survey, weekly. Figures are market facts, not recommendations.
The Tax Bill Inside the Repricing
The essay · by the Editor
Letters 2–4 told one story in three parts: a loop (Y2K → hyperscaler), a blast radius (Mag-7 → retirement), a repricing (where the next tail lands). This is the fourth wall of that room: when the repricing arrives, the Code does not pause.
The market can mark your account down in a week. The Code marks your return once a year, on numbers you chose nine months earlier. The gap between those two clocks is where tax is won or lost.
The repricing is not a forecast. It is a repricing of the same seven names that carried the last cycle, now carrying more of the S&P's return than at any point since the Nifty Fifty. When concentration unwinds, it unwinds through three doors you have already seen: a duration door (rates stay higher), a margin door (capex without cash), and a flow door (every 401(k) bought the same trade).
You do not need to be right about which door opens first. You need to be ready for what does not change when it does: the filing season still opens in January, the cost basis still matters, and the choice you make on a down day in October writes a number on a form in April.
1. The harvest you did not take
A 20 percent drawdown creates the year's best tax asset: a loss you can use. Under Reg. §1.1012 and §1091 wash-sale rules, the asset is not the loss itself — it is the replacement position you are willing to own for 31 days. The Code rewards the investor who will sell what fell and buy what they meant to own anyway. It punishes the one who waits for even.
2. The conversion you thought you missed
A lower account balance lowers the price of a Roth conversion. Section 408A(d) does not care what you paid for the shares; it cares what they are worth on the day you convert. A repricing turns a $50,000 conversion into a $40,000 conversion of the same shares — same future growth, smaller inclusion. The decision is still marginal-rate vs. expected-rate, but the entry price just went on sale. This is general mechanics, not advice about your account.
3. The basis step you carry into next year
Every share you sell after a repricing resets the chapter on holding period and character. Section 1222 still sorts gain by holding period; Section 1211 still limits capital losses to $3,000 against ordinary income. The Code did not reprice. It kept its old lines. Your job in a down market is to draw the new positions across those old lines cleanly, with records that survive audit.
None of this requires a prediction about the bottom. It requires a file that is current before you need it: cost-basis lot detail, holding periods, IRA basis (Form 8606), and the prior year's return in hand. Repricing punishes the unfiled more than the invested.
From the desk of the Editor. This issue closes the opening serial: the loop, the blast radius, the repricing, and now the tax bill inside it. Next week the Letter settles into its rhythm — quickies first, one essay or brief, and the numbers corner every time. The methodology underneath all of it is the Guide; own it and the essays read like chapter previews. Steal the thinking either way. That's what it's for.
— Paul D. Diaz, EA, MBA
Editor, THE TAX CUTTERY Letter