Monthly Archives: December 2017

The Passing of the Tax Cuts and Jobs Act – What You Should Know

THURS, DEC 21st, 2017

As you have likely seen in the news, The Tax Cuts and Jobs Act was passed by both the House and the Senate this week. This bill is widely expected to be signed into law by President Trump. The bill brings important changes to most American families – likely including yours.

At Albion Financial Group, we are not accountants nor are we attorneys. However, as a financial advisor, we want to make sure you are aware that this bill likely impacts you and that there are year-end actions that may be financially beneficial.  Most importantly, we want to encourage you to call your accountant. Your accountant is in the best position to advise you on how the bill impacts you and what moves, if any, you should consider prior to year-end.

This Wall Street Journal article from December 19th contains an excellent summary of the ways the bill will impact many American families. The article is both descriptive and prescriptive – offering an excellent summary of the bill’s salient points while providing prescriptive year-end moves to consider. It is a short article and we encourage you to read it in its entirety. Below we highlight two of the article’s suggestions because of their broad application:

1) The tax benefit of charitable donations made in 2018 might not be as meaningful as those made in 2017. One way to obtain a 2017 charitable deduction is to open and fund a donor advised fund account. Donor advised fund accounts allow you to make a charitable donation in one year and to delay the ultimate decision as to which charities to support until later years. Please call the wealth advising team Albion Financial Group at (801) 487-3700 if you would like more information on donor advised fund accounts, and, please call your accountant for their own advice on this topic. Be aware, most custodians apply “best efforts” in late-December meaning they cannot guarantee to have donor advised fund accounts open and funded in time for a 2017 tax deduction.

From the hyperlinked article: “Currently about 30% of filers, or 45 million, itemize their deductions. The pending change will cause perhaps 20 million or more of them to switch to the standard deduction. Many will be married couples, as the new $10,000 cap on state and local tax deductions is per return, not per person. The bottom line is that affected taxpayers will no longer get value from deducting charitable donations.

2) The bill caps deductions of state and local income tax or sales and property taxes at $10,000 per return. Please read the article for important implications for families that are subject to alternative minimum tax (AMT) and be sure to discuss this with your accountant. Below are two year end strategies from the article that we want to highlight.

a) You may want to make sure you have fully paid any state income tax you will owe for 2017. In most years, some taxpayers choose to pay as little state income tax as permissible and then make a final payment to the state when they file their taxes in April of the following year. This year you may want to fully fund your 2017 state tax liability because of the $10,000 cap that applies for state and local income taxes paid in 2018.

b) If you own your primary residence, you may want to prepay your 2018 property tax. We are fortunate in Utah that most counties will accept prepayment of property tax. If, after talking with you accountant, you would like to prepay your 2018 property tax, you can do so by contacting your county treasurer. Below we share useful county websites and phone numbers to learn more and to prepay your 2018 property taxes online.

i. Salt Lake County Treasurer (385) 468-3000  or

ii. Summit County Treasurer  (435) 336-3267

iii. Utah County Treasurer (801) 851-8255

We hope this blog post proves useful. We wish we could have published this post earlier but we felt it prudent to wait until the tax bill passed both the House and the Senate. We hope you understand and agree. As always, please call us at (801) 487-3700 if we can be of assistance with tax strategies or any other financial planning question.

Happy Holidays,

Doug Wells, CFP®, CFA®, MBA / Partner
Albion Financial Group
(801) 487-3700

Basic Risks and Suitability – Bitcoin & Cryptocurrencies

MON, DEC 18th, 2017

At this time we are neither recommending nor endorsing bitcoin, nor any other cryptocurrency. However, if one wishes to use a small slice of only the purest form of risk capital (i.e., money you can afford to lose if / when it goes to zero) to play in this new and highly volatile market, we think that’s potentially OK. That said it’s imperative to fully understand the risks – chiefly the potential, and even likely, loss of capital – before committing any funds to this market.

Below, we highlight some of these risks as well as provide some things to think about prior to making any trades. It’s essential to note that this, and anything we opine on regarding cryptocurrencies, is for informational purposes only.

-Bitcoin, and cryptocurrencies more broadly, are not investments. It is important to understand the crucial differences between investments and speculation.

-And at this point in time trading cryptocurrencies is purely speculation on price without any consideration for underlying fundamentals or intrinsic value, two time-tested features that shape the core tenets of investing.

-At least for now, we view speculating on cryptocurrencies as akin to gambling. Cryptocurrencies are really only worth what the next speculator is willing to pay for it. If you have trouble imaging a loss (large or small) in these cryptocurrencies, you shouldn’t be involved in this market.

-Given the lack of a meaningful track record, relevant market statistics, and merit-based evidence, we presently have no recommendation on including cryptocurrencies into a comprehensive asset allocation model.

-We also believe that a “soft accreditation” should be carefully considered before speculating in this space. We define soft accreditation to basically mean: if you’ve never traded or speculated before, cryptocurrencies are probably not a suitable place to start. Experience goes a long way in these Wild West-type markets.

-Picking up on that last point, cryptocurrencies are unique – beyond just the ABCs of what they are – in that there are multiple ways to lose the entire value of your digital account. Not only can these cryptocurrencies go to zero, but they can also be hacked, stolen, or wiped out entirely through other methods that standard investments like stocks and bonds cannot be.

-There are risks that regulators – the SEC, IRS, Federal Reserve, etc. – and / or legislative bodies like the U.S. Congress could come in and attempt to shut down, control, or otherwise restrain activity and underlying tenets of these markets. There are also similar risks at the global level (i.e., other counties pursuing regulation or intervening in markets).

-The cryptocurrency landscape can change daily. What you hear and read today may not be true tomorrow. It’s that new; it’s that misunderstood; it’s that complex. Don’t believe everything you hear. And take even the core ideas swirling around these cryptocurrencies with a grain of salt. (For example, are these digital coins actually even “currencies”? Most sensible analyses of what a currency truly is would conclude that they are not).

So big picture, what’s our counsel? What’s appropriate? Should cryptocurrencies be included in one’s portfolio or asset allocation? We think it’s perhaps prudent to think about it in this way: *We presently have no asset allocation guidance to provide; individuals should take all of the above bullet points into consideration before committing any capital to cryptocurrencies. In philosophical terms, treat our views on what’s appropriate regarding cryptocurrency participation the same as if someone asked “how much should I spend playing craps in Las Vegas this weekend?” In other words, what can you reasonably afford to lose? Any and all trades made in bitcoin and cryptocurrencies should be taken in the context of one’s holistic financial situation. 

The investment team at Albion Financial Group is well versed in bitcoin / cryptocurrencies and blockchain technology. Please reach out to us at 801-487-3700 or if we can answer your bitcoin, investment, or financial planning questions.

Albion Cryptocurrency Team


Disclaimer: Information provided is for educational purposes only. This is not a recommendation to buy or sell any security or cryptocurrency.  There are significant risks associated with cryptocurrency that are unique and must not be taken lightly.  It is critical that you perform your own due diligence prior to engaging in any buy or sell transaction.  The value of bitcoin can, and may, ultimately go to zero.             

Bitcoin 101 FAQs

MON, DEC 11th, 2017

Bitcoin 101 FAQs:

Bitcoin, and more broadly cryptocurrencies, are seeing increasing news coverage. This has left many wondering: “What is bitcoin and how does it work?” For those trying to better understand bitcoin and cryptocurrencies, here’s our understanding on a handful of frequently asked questions:

What is bitcoin?

Bitcoin is a digital “currency” that can be used to purchase goods and services (only at select locations, for now), or held as a store of speculative value. There are many differences between bitcoin and traditional currency, but the principal difference is that bitcoin is not issued by a government or regulated by a government entity.

Where did bitcoin come from?

This is where it gets a bit mysterious. Bitcoin was created by “Satoshi Nakamoto”, an unknown individual or group of individuals. Under this pseudonym a white paper was circulated in 2008 that first described the concept for a transparent, visible peer-to-peer payment system authenticated by a vast network that does not require the presence of a third party middleman – such as banks or other financial institutions. By combining cryptography and unique software protocols, Satoshi Nakamoto originated a payment system that allowed participants to transact directly with one another.

How is it possible to make currency transactions without banks?

Bitcoin transactions have been made possible with the encryption technology underpinning cryptocurrencies known as “blockchain.” Blockchain is a global Internet-wide distributed network that is at its core a decentralized accounting ledger recording every bitcoin transaction. The blockchain ledger is shared by way of an extensive network and the information therein is validated by network “miners” every ten minutes by solving mathematical puzzles using very fast computers and high amounts of electricity. This network validated ledger is crucial as it ascribes proof of ownership to digital assets like bitcoin. If the ledger proves ownership, participants can have trust when making transactions.

Tying together the concept of bitcoin and blockchain, think of it this way – the bitcoin “coins” themselves are simply seats within the aforementioned blockchain ledger. Anyone can buy into or sell out of this ledger at any time – with no prior consent, and with little-to-no fees. Therefore, when buying a bitcoin you are essentially acquiring one of a number of fixed slots within this ledger. You leave the ledger by selling your bitcoin to someone else who wishes to buy in.

If I want to buy bitcoin, how would I make a purchase? Do I need to buy a whole coin?

There are many exchanges out there that allow participants to deposit US dollars (or other widely accepted global currencies) directly from traditional bank accounts in exchange for bitcoin. Some cryptocurrency exchanges also have mobile apps allowing participants to buy bitcoin anytime, anywhere.

Additionally, participants need not buy a whole bitcoin to participate. The smallest unit of bitcoin, a “satoshi”, is the size of one hundred millionth of a single bitcoin (0.00000001 BTC).

What are the risks to purchasing and holding bitcoin? The current price seems high!

It depends on the type of risk one is referring to. Let’s start with general cybersecurity threats. Cryptocurrency exchanges, including those which trade bitcoin, have been hacked before, and will likely be hacked again. Perhaps the most notable example was in 2014 when “Mt. Gox”, the largest bitcoin exchange at the time, failed as a direct result of hackers and vast bitcoin theft. Security surrounding cryptocurrency exchanges have notably improved since Mt. Gox’s failure. Individuals can use bitcoin digital wallets and vaults that are encrypted with a secure network key which dramatically reduces the possibility of being hacked.

Another key risk worth touching on is the possibility of loss of capital for those speculating on its price. Bitcoin has experienced a monumental run as of late. There are a variety of opinions and market variables as to why this has occurred. Will this price rally continue, or crash? Nobody knows for sure. However one way to think about it is, by design, bitcoin was given a finite supply – determined at inception to be 21,000,000 bitcoins – and we are now seeing growing awareness leading to rising demand. This basic supply / demand dynamic may help describe, at least at some level, recent price moves in bitcoin. That being said, just because more cryptocurrency enthusiasts are now entering the market seemingly pushing up prices does not mean everyone should take a position. With a greater understanding of bitcoin – both its potential opportunities and risks – paired with careful holistic wealth advice, more educated decision making can be made on potential bitcoin / cryptocurrency participation.

We hope that this FAQ provides a helpful introduction to bitcoin / cryptocurrencies, and perhaps even sparks your desire to want to learn more. The investment team at Albion Financial Group is well versed in bitcoin / cryptocurrencies and blockchain technology. Please reach out to us at 801-487-3700 or if we can answer your bitcoin, investment, or financial planning questions.

Disclaimer: Information provided is for educational purposes only. This is not a recommendation to buy or sell any security or cryptocurrency.  There are significant risks associated with cryptocurrency that are unique and must not be taken lightly.  It is critical that you perform your own due diligence prior to engaging in any buy or sell transaction. The value of bitcoin, or any cryptocurrency can, and may, ultimately go to zero.