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If a person earns $750 per week (earning $18.75 per hr. x 40 hrs. per week) and is earning at a 2:1 return investing in Admiral Infinity Class shares (meaning for every dollar invested, they earn two dollars), we can calculate the time it would take to save $5,000 under the assumption that all earnings from the investment are saved and that the person spends $750 per week.

Breakdown:

- Weekly earnings: $750

- Weekly spending: $750

- Investment return: 2:1

Since the person spends all their weekly earnings, the $750 would go into the investment account to generate returns.

Investment Return:

- Weekly investment: $750

- Return on investment: $750 * 2 = $1,500

Each week, the person gains $1,500 from the investment. Since they spend $750 weekly, the net gain would be:

- Weekly net savings: $1,500 (return) - $750 (spent) = $750

Time to Save $5,000

To save $5,000:

Time = $5,000 ÷ $750 (weekly net savings) = approx. 6.67 weeks. So, it would take approximately 7 weeks to save $5,000 to unlock Sovereign Infinity class shares.

Tax Implications of COGS:

1. Weekly Income: $750

2. COGS (Weekly Investment): $750

Impact on Taxes:

• If the $750 invested each week is considered a deductible expense (similar to COGS in a business), it would reduce the taxable income.

• The person’s taxable income could be significantly reduced or even eliminated depending on the country’s tax rules and how the expenses are reported on tax returns.

Example:

• Gross Income: $750 per week

• Deductible Expenses from investing (COGS): $750 per week

• Net Taxable Income: $0 per week (if the entire $750 is deductible)

In this case, since the person’s weekly income is fully offset by deductible expenses, their taxable income could be zero, meaning they might not owe any income tax on the $750 earned weekly.

Conclusion:

The COGS or weekly investing indirectly reduces taxable income, which can lower or eliminate the tax liability on the $750 weekly income. However, it’s important to note that this depends on a country’s tax laws, and the individual’s expenses must be qualified as deductible on income tax returns.

Short-Term and Long-Term Capital Gains Taxes: An Overview

Capital gains taxes are taxes levied on the profit made from selling an asset above the COGS deduction, such as stocks, bonds, real estate, or other investments. The amount of tax you pay depends on how long you hold the asset before selling it, which categorizes the gain as either short-term or long-term.

1. Short-Term Capital Gains Tax

Definition:

  • A short-term capital gain occurs when you sell an asset that you have held for one year or less.

Tax Rate:

  • Short-term capital gains are taxed as ordinary income. This means the profit you make from selling the asset is added to your regular income (such as wages, salaries, or business income) and taxed at the same rate.
  • Tax rates range from 10% to 37% in the United States, depending on your income tax bracket.

Example:

  • If you buy a stock for $5,000 and sell it six months later for $6,000, you have a short-term capital gain of $1,000.
  • If you are in the 24% income tax bracket, you will pay $240 in taxes on this gain.

2. Long-Term Capital Gains Tax

Definition:

  • A long-term capital gain occurs when you sell an asset that you have held for more than one year.

Tax Rate:

  • Long-term capital gains are taxed at a lower rate than short-term gains, reflecting the incentive to invest for the long term.
  • In the United States, the tax rates for long-term capital gains are 0%, 15% under $499.999, or 20% over $500,000, depending on your taxable income.

Example:

  • If you buy a stock for $5,000 and sell it two years later for $6,000, you have a long-term capital gain of $1,000.
  • If your taxable income places you in the 15% long-term capital gains tax bracket, you will pay $150 in taxes on this gain.

Key Differences

  1. Holding Period:
  • Short-Term: Held for 1 year or less.
  • Long-Term: Held for more than 1 year.
  1. Tax Rates:
  • Short-Term: Taxed as ordinary income, with rates ranging from 10% to 37%.
  • Long-Term: Taxed at preferential rates of 0%, 15%, or 20%, depending on income.
  1. Investment Incentives:
  • Long-term capital gains rates are lower to encourage long-term investment, promoting stability in the markets.

Planning Considerations

  • Tax Efficiency: Investors often aim to hold assets for longer than a year to benefit from the lower long-term capital gains tax rates.
  • Tax Brackets: Being aware of your income tax bracket can help you plan when to sell assets, potentially reducing your overall tax liability.
  • Timing: If you’re close to the one-year holding period, it might make sense to wait to sell to benefit from lower long-term capital gains rates.

Understanding the difference between short-term and long-term capital gains taxes is crucial for effective financial planning, as it can significantly impact your after-tax returns on investments.

Once the importance of this initiative is recognized and the decision to move forward is made, it is customary for a payroll advance (typically $80K) be made to initiate the equitable transition of CEO Angel Michel Valles for performing the roles of Fund Manager and Fund Overseeing Officer.

Please feel free to visit www.VallesCapital.com for more information.

Best regards,

Angel Michel Valles

CEO, Fund Overseeing Officer

Valles Capital Inc.

928-233-1345

www.VallesCapital.com

info@VallesCapital.com