Tax Moves to Make Now—WSJ, Reuters, Accounting Today, Accounting Web
Although 2013 Rates Are Still Unclear, Smart Planners Are Making These Moves Today
Laura Sanders at the Wall Street Journal reports that the annual scramble to make smart tax moves before December 31 is proving especially vexing this year, since Congress still hasn’t settled 2013 tax rates on income, investments, large gifts, and estates. Deductions and other breaks are in doubt. And some questions—such as the applicability of the alternative minimum tax—are still unsettled for 2012.
Nonetheless, tax planning is possible. Some suggestions:
- Make Charitable Gifts
- If You Want to Donate IRA Assets to Charity, Wait a Bit Longer
- Make an Extra Mortgage Payment, or Pay Down Principal
- Don’t Fret About the Alternative Minimum Tax “Patch” for 2012
- Maximize Contributions to Employer-Sponsored Retirement Plans
- Evaluate Stock Options and Restricted Stock
- Think Twice Before Harvesting Gains
- Harvest Capital Losses, Up to a Point
- Use Up Funds in a Medical Flexible-Spending Account
- Accelerate Medical Expenses
- Set up a Health Savings Account for 2012
- Write Next Semesters Tuition Checks Before Year End
- Prepay State Taxes
- Make Gifts up to $13,000 to Relatives or Friends
- Contribute to 529 Education Savings Accounts
- Have a Closely Held Business Pay a Dividend
- Buy Depreciable Equipment for a Closely Held Business
Read the full article for details and explanation on each point [HERE].
Jim Keller, senior tax analyst for Thompson-Reuters, weighs in with his suggestions on Top Small Business Tax-Saving Moves for Remainder of 2012:
1. Sell Corporate Stock, Partnership Interests, and LLC Interests.
2. Give Business Interests to Family Members.
3. Purchase Property Eligible for Section 179 Deduction.
4. Purchase Property Eligible for Bonus Depreciation.
5. Redeem a Shareholder’s Stock.
6. Liquidate the Business
7. Distribute C Corporation Earnings and Profits.
8. Distribute S Corporation Earnings and Profits.
9. Make an S Corporation Deemed Dividend.
10. Minimize Self-employment (SE) Taxation.
Accounting Today offers Top 12 Year End CPA Tax Saving Tips.
And if you’re planning gifts to an LLC, be aware: Accounting Web’s Ken Berry reports that IRS Won’t Concede on ‘Wandry Clauses’:
Earlier in the year, the Tax Court allowed a taxpayer to use a formula clause to determine the value of a business interest for gift tax purposes (Wandry, TC Memo 2012-88). But the IRS refuses to knuckle under to the court. Although it has dropped its appeal, the IRS just announced its nonacquiescence to the Wandry decision (IRB 2012-46).
What it means: You can expect the IRS to continue to challenge the use of so-called “Wandry clauses” in business valuations. So tax practitioners should take this precious Tax Court victory with a giant grain of salt.
