System and method for forecasting tax effects of financial transactions

• US 7,305,353 B1
• Filed: 03/01/2001
• Issued: 12/04/2007
• Est. Priority Date: 03/01/2001
• Status: Expired due to Term

• Current Assignee: Charles Schwab & Company Incorporated (Charles Schwab Corporation)
• Original Assignee: Charles Schwab & Company Incorporated (Charles Schwab Corporation)
• Inventors: Nicklanovich, Steven, Foley, John T.
• Primary Examiner(s): Zeender; F.
• Assistant Examiner(s): Haider; Fawaad
• Application Number:
  US09/798,110
• Time in Patent Office: 2,469 Days
• Field of Search: 705/19, 705/35, 705/36, 705/37, 705/40, 364/300, 364/401, 364/402, 364/408, 235/184, 235/492, 395/144, 395/204, 395/239, 395/600
• US Class Current: 705/19
• CPC Class Codes: G06Q 20/102 Bill distribution or payments
• CPC Class Codes: G06Q 20/207 Tax processing
• CPC Class Codes: G06Q 40/00 Finance; Insurance; Tax strategies; Processing of corporate or income taxes
• CPC Class Codes: G06Q 40/02 Banking, e.g. interest calculation or account maintenance credit or loans G06Q40/03
• CPC Class Codes: G06Q 40/04 Trading; Exchange, e.g. stocks, commodities, derivatives or currency exchange
• CPC Class Codes: G06Q 40/06 Asset management; Financial planning or analysis
• CPC Class Codes: G06Q 40/10 Tax strategies

Abstract

A system and method for forecasting tax effects of financial transactions is provided. The system and method include a series of web pages. The web pages allow a user to 1) determine their federal and state tax rates, 2) describe the asset they wish to sell. Additional web pages then display the tax consequences of the sale of the asset along with the details of the calculations used to evaluate those consequences. Still more web pages can be used to describe an asset to buy. In this case, the displayed consequences are expanded to compare the benefit of holding the current asset against the benefit of acquiring the new asset.

Claims

1. In a computer system, forecasting the financial effects of holding an asset versus selling the asset and purchasing an alternative asset, where the computer system includes a memory device which stores software instructions, carrying out a method comprising the steps of:

generating a first sequence of one or more web pages, wherein the first sequence of web pages allows a user to select between a first option of calculating tax on the sale of stock or mutual fund, and a second option of comparing two investment options on an after tax basis, where a first investment option is continuing to hold a particular asset, and the second investment option is selling the particular asset, and purchasing a different asset;

in response to a user selecting the first option, generating a second sequence of one or more web pages, the second sequence of one or more web pages allowing a user to enter information describing an asset to be sold;

calculating financial effects, including an estimated capital gains tax liability, resulting from the selling of the asset described by the user in the second sequence of one or more web pages;

generating a third sequence of one or more web pages displaying the financial effects of selling the asset described in the second sequence of one or more web pages;

wherein the third sequence of one or more web pages which display the financial effects of selling the asset described by the user in the second sequence of one or more web pages, include the estimated capital gain tax from selling the asset described in the second sequence of one or more web pages;

in response to the user selecting the second option, generating a fourth sequence of one or more web pages, the fourth sequence of one more web pages allowing the user to enter information describing an asset to be sold, and to enter information regarding an asset to be purchased, wherein the information regarding the asset to be sold includes an expected rate of return of the asset to be sold, and wherein the information regarding the asset to be purchased includes an expected rate of return for the asset to be purchased;

calculating a time period required for holding the to be purchased asset to reach a value that would be equal to the value for the to be sold asset if the to be sold asset were not sold, wherein this calculation takes into the account the tax effects of selling the to be sold asset described in the fourth sequence of one or more pages;

generating a fifth sequence of one or more web pages which textually and graphically present the results of the calculating the time period;

wherein the calculating the financial effects of selling the asset identified in the second sequence of one or more web pages includes determining the capital gain or loss resulting from the sale, determining the net proceeds resulting from the sale; and

determining an estimated tax resulting from the sale; and

determining if the sale of the asset identified in the second sequence of one or more web pages will result in a long term, or a short term capital gain, and if the sale will result in a short term capital gain, to generate a message indicating an amount of time which the asset identified in the second sequence of web pages must be held in order to avoid the sale of the asset being treated as a short term capital gain; and

the third sequence of one or more web pages displays the message indicating an amount of time which the asset identified in the second sequence of web pages must be held in order to avoid the sale of the asset being treated as a short term capital gain.

2. The method of claim 1 wherein the calculating the financial effects of selling the asset identified in the fourth sequence of one or more web pages includes determining the capital gain or loss resulting from the sale, determining the net proceeds resulting from the sale;

and determining an estimated tax resulting from the sale; and

determining if the sale of the asset identified in the fourth sequence of one or more web pages will result in a long term, or a short term capital gain, and if the sale will result in a short term capital gain generating a message indicating an amount of time which the asset identified in the fourth sequence of web pages must be held in order to avoid the sale of the asset being treated as a short term capital gain; and

the fifth sequence of one or more web pages displays the message indicating an amount of time which the asset identified in the fourth sequence of web pages must be held in order to avoid the sale of the asset being treated as a short term capital gain.

3. The method of claim 2, including:

wherein the fifth sequence of one or more web pages includes a plurality of data fields showing information entered by the user in the fourth sequence of pages;

allowing the user to edit the information shown in the plurality of data fields in the fifth sequence of one or more web pages;

after the user has edited the information shown in the plurality of data fields in the fifth sequence of one or more web pages, recalculating the time period for holding the purchased asset so that it will have value that would be equal to the value for the sold asset if the sold had were not sold; and

generating a sequence of one or more web pages displaying the recalculated time period.

4. The method of claim 3 further including:

including in each of the first sequence of one or more web pages, the second sequence of one or more web pages, the third sequence of one or more web pages, the fourth sequence of one or more web pages, and the fifth sequence of one or more web pages, a synopsis showing the user how far the user has progressed through the method of forecasting effects of financial transactions.