Can the U.S. government retroactively tax gains made earlier in the fiscal year?
"You're certainly referring to ""Ex Post Facto"" laws, and while the US is constitutionally prohibited from passing criminal laws that are retroactive, the US Supreme Court has upheld many tax laws that apply tax code changes retroactively. You might ask a similar question on Law.SE for a more thorough treatment of the legalities of congress passing those laws, but I will stick to the personal finance portion of the question. What this means is that you can't expect that the current tax laws will be in force in the future, and your investment/retirement plans should be as flexible as possible. You may wish to have some money in both Roth and traditional 401(k) accounts. You might not want to have millions of dollars in Roth accounts, because if congress does act to limit the tax benefits of those accounts, it will probably be targeting the larger balances. If you are valuing tax deductions, you should put slightly more weight on deductions that you can take today than deductions that would apply in the future. If you do find yourself in trouble because of a retroactive change, be sure to consult a tax lawyer that specializes in dealing with the IRS to possibly negotiate a settlement for a lower amount than the full tax bill that results from the changes."
"If you start an LLC with you as the sole member it will be considered a disregarded entity.  This basically means that you have the protection of being a company, but all your revenues will go on your personal tax return and be taxed at whatever rate your personal rate calculates to based on your situation.  Now here is the good stuff.  If you file Form 2553 you can change your sole member LLC to file as an S Corp.  Once you have done this it changes the game on how you can pay out what your company makes.  You will need to employ yourself and give a ""reasonable"" salary.  This will be reported to the IRS and you will file your normal tax returns and they will be taxed based on your situation. Now as the sole member you can then pay yourself ""distribution to share holders"" from your account and this money is not subject to normal fica and social security tax (check with your tax guy) and MAKE SURE to document correctly.  The other thing is that on that same form you can elect to have a different fiscal year than the standard calendar IRS tax year.  This means that you could then take part of profits in one tax year and part in another so that you don't bump yourself into another tax bracket.  Example:  You cut a deal and the company makes 100,000 in profit that you want to take as a distribution.  If you wrote yourself a check for all of it then it could put you into another tax bracket.  If your fiscal year were to end say on sept 30 and you cut the deal before that date then you could write say 50,000 this year and then on jan 1 write the other check." NAFTA affected U.S. workers in four principal ways. First, it caused the loss of some 700,000 jobs as production moved to Mexico. Most of these losses came in California, Texas, Michigan, and other states where manufacturing is concentrated. To be sure, there were some job gains along the border in service and retail sectors resulting from increased trucking activity, but these gains are small in relation to the loses, and are in lower paying occupations. The vast majority of workers who lost jobs from NAFTA suffered a permanent loss of income.  Second, NAFTA strengthened the ability of U.S. employers to force workers to accept lower wages and benefits. As soon as NAFTA became law, corporate managers began telling their workers that their companies intended to move to Mexico unless the workers lowered the cost of their labor. In the midst of collective bargaining negotiations with unions, some companies would even start loading machinery into trucks that they said were bound for Mexico. The same threats were used to fight union organizing efforts. The message was: “If you vote in a union, we will move south of the border.” With NAFTA, corporations also could more easily blackmail local governments into giving them tax reductions and other subsidies.  Third, the destructive effect of NAFTA on the Mexican agricultural and small business sectors dislocated several million Mexican workers and their families, and was a major cause in the dramatic increase in undocumented workers flowing into the U.S. labor market. This put further downward pressure on U.S. wages, especially in the already lower paying market for less skilled labor.  Fourth, and ultimately most important, NAFTA was the template for rules of the emerging global economy, in which the benefits would flow to capital and the costs to labor. The U.S. governing class—in alliance with the financial elites of its trading partners—applied NAFTA’s principles to the World Trade Organization, to the policies of the World Bank and IMF, and to the deal under which employers of China’s huge supply of low-wage workers were allowed access to U.S. markets in exchange for allowing American multinational corporations the right to invest there.  Please thank Bill Clinton. &gt; Never said that.  Huh?  Did you NOT say:  * Governments **taxing** people people too much that's causing deflation.  I mean, there are some out there who claim that it's *inflation* that is fiscal. While I also think that's an interesting and particular theory, the theory that *deflation* is fiscal is a view that one just doesn't encounter often. Which is why I'm interested in seeing what sort of sources and/or evidence this theory flows from.   &gt; You don't **believe** taxes are deflationary?  You're asking me what I believe in? I believe in the old-school, neoclassical view on the matter. &gt;*The budget deficit in the U.S. this year will be wider than predicted four months ago as weaker-than-expected economic growth in the first half hurt tax revenue, the Congressional Budget Office said.*  &gt;*The projected shortfall will be $506 billion in the 12 months ending Sept. 30, compared with an April prediction for $492 billion, the nonpartisan CBO said today in a report. That would be 2.9 percent of gross domestic product, the smallest since 2007 as a share of the economy, compared with a gap of $680 billion, or 4.1 percent of GDP, last fiscal year, it said.*  Cross-post from /r/MAConservative Could you not just say that you had bought it when it was pennies on the dollar and made the millions that way? There isn't much of a transaction record, is there? I also just realized that I don't understand how taxes work in that situation. If you have a different currency from the U.S. Dollar, and it increases in value greatly, do you have to pay tax on that increased value relative to the U.S. dollar? They don't when it's minimal increases. "There are ways to mitigate, but since you're not protected by a tax-deferred/advantaged account, the realized income will be taxed. But you can do any of the followings to reduce the burden: Prefer selling either short positions that are at loss or long positions that are at gain. Do not invest in stocks, but rather in index funds that do the rebalancing for you without (significant) tax impact on you. If you are rebalancing portfolio that includes assets that are not stocks (real-estate, mainly) consider performing 1031 exchanges instead of plain sale and re-purchase. Maximize your IRA contributions, even if non-deductible, and convert them to Roth IRA. Hold your more volatile investments and individual stocks there - you will not be taxed when rebalancing. Maximize your 401K, HSA, SEP-IRA and any other tax-advantaged account you may be eligible for. On some accounts you'll pay taxes when withdrawing, on others - you won't. For example - Roth IRA/401k accounts are not taxed at all when withdrawing qualified distributions, while traditional IRA/401k are taxed as ordinary income. During the ""low income"" years, consider converting portions of traditional accounts to Roth." If the portfolio itself is taxable, then yes; if you have two stocks and you're rebalancing them, without using new cash, you are forced to sell one stock to buy another. That sale is taxable, unless you're in some sort of tax deferred/deductible account, such as an IRA.   If you're talking about you being in a mutual fund and the fund itself rebalances, the same rules apply as above, though indirectly; you'll have capital gains realized and distributed to you, those gains will be taxed unless, again, your account is a retirement account. As for income tax purposes, dg99's answer is correct. The entire amount that is converted is post-tax (you had to pay tax on any pre-tax amounts upon conversion), so you do not pay tax on it when you withdraw it in a non-qualified distribution, similar to with contributions. However, there's another, perhaps more important, consideration here -- the early withdrawal penalty for non-qualified distributions from Roth IRA. For non-qualified distributions of contributions, there is never an early withdrawal penalty. For non-qualified distributions of rollovers and conversions, there is an early withdrawal penalty if withdrawn within 5 years of the rollover or conversion, but only on the part of the rollover or conversion that was taxable during the conversion. So if you want to withdraw within 5 years of the conversion, then it works differently from direct contributions. Because contributions and conversions have different treatment for the penalty, the ordering between them matters too. Contributions are always withdrawn before rollovers and conversions (a later contribution still comes before an earlier rollover or conversion). But within rollovers and conversions, they are ordered by year (an earlier rollover or conversion comes before a later one), and within a year, the taxable part is ordered before the non-taxable part.