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In these uncertaintimes, tax planningis more importantthan everPresented by:<<Company Name>>[Insert your logo here]
[Insert your logo here]2“The MoreThings Change,The More TheyRemain TheSame.”
Rising rates andexpiring breakscomplicate taxplanningTAX PLANNING BASICS
Business: Expired as of 12/31/2011 100% bonus first-year depreciation allowance for qualified property Section 179 expen...
Business: Expired as of 12/31/2011 Research credit under Code Sec. 41(h)(1)(B) Various other credits including:o Work op...
Business: Expiring as of 12/31/2012 Bonus Depreciationo The 50% bonus first-year depreciation for assets placed in servic...
7Section 179 expensing election Allows you to deduct rather than depreciateasset purchaseso Deduct up to $139,000 of purc...
Vehicle-related tax breaks Deduct out-of-pocket expenses (fuel, insurance,depreciation, etc.) or mileageo 55.5 cents per ...
Business: Expiring as of 12/31/2012 The temporary payroll tax cut will no longer apply. The two percentagepoint cut in em...
Individuals: Expired as of 12/31/2011 State and local sales tax deduction IRA charitable distribution AMT patch Person...
Individuals: Expiring as of 12/31/2012 Temporary payroll tax cut Increase of 15% rate bracket for MFJ Reduced capital g...
Individuals: Expiring as of 12/31/2012 Liberalized child and dependent care credit rules American opportunity tax credit...
New Taxes 2013 and Beyond 3.8% Medicare tax on unearned income .9% Additional Medicare tax Higher threshold for itemize...
AMT Triggers State and local income tax deductions Real estate and personal property tax deductions Miscellaneous itemi...
Avoiding AMT or reducing its impact Planning for AMT will be a challengeuntil Congress passes long-term relief AMT syste...
What to consider doing If subject to AMT this yearo Accelerate income and short-term capital gains into 2012o Defer expen...
Timing of income and expenses is key Smart timing can reduce your tax liability Poor timing can unnecessarily increase i...
Estate/Gift Taxes: 2012 Estate and Generation Skipping Transfer TaxHighest Rate 35%Exemption $5,120,000 Gift TaxHighest ...
Estate/Gift Taxes: 2013 Estate and Generation Skipping Transfer TaxHighest Rate 55%*Exemption $1,000,000 Gift TaxHighest...
20Transfer tax exemptions and rates
21Gift tax Gifts to spouse are tax-free under marital deduction Gift tax follows estate tax exemption andtop rate for 20...
22 2012 may be the year to make large giftso Potentially lock in the record-high $5.12 million gift tax exemptionwhile it...
Tax-smart giving Consider estate and income tax effects of giftso To minimize your estate tax, gift property withgreatest...
Tax-smart giving Plan gifts to grandchildren carefullyo Annual exclusion gifts are generally exemptfrom GST taxo For gift...
 Gift interests in your businesso Leverage gift tax exclusions and exemption bygifting ownership interests May be eligib...
Administration’s 2013 ProposalsIndividual Income Tax Possible limitations on itemized deductions Retain current rates fo...
Administration’s 2013 ProposalsEstate & Gift TaxESTATE TAX Exemption of $3,500,000 Top rate – 45%GIFT TAX Exemption of ...
Administration’s 2013 ProposalsBusiness Taxes Broaden base to cut corporation tax rate to 28% Simplify small business ta...
2012 Year End PlanningBusiness Taxes Consider acquiring automobiles, fixed assets, plant and equipment byyear end to take...
2012 Year End PlanningGift Taxes Consider gifts to maximize the current $5,120,000 exemption.30
2012 Year End PlanningIndividual Taxes Consider “mining” capital gains to lock in tax at 15% bracket. Consider “electing...
Please contact us for assistance:610.668.4200www.isdanerllc.com[Insert your logo here]Thank You!
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Tax Planning by Isdaner & Company, Philadelphia area certified public accounting firm headquartered on the Main Line

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Tax planning basics brought to you by Isdaner & Co.
-rising rates
-tax breaks
-business tax
-payroll tax
-individual tax
-medicare tax
-estate tax
-gift tax
-transfer tax exemption & rates
-section 179
-depreciation
-state & local sales tax deduction
-IRA charitable distribution
-AMT triggers and how to avoid AMT
-mortgage insurance premiums as interest
-child/dependent care credit rules

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Tax Planning by Isdaner & Company, Philadelphia area certified public accounting firm headquartered on the Main Line

  1. 1. In these uncertaintimes, tax planningis more importantthan everPresented by:<<Company Name>>[Insert your logo here]
  2. 2. [Insert your logo here]2“The MoreThings Change,The More TheyRemain TheSame.”
  3. 3. Rising rates andexpiring breakscomplicate taxplanningTAX PLANNING BASICS
  4. 4. Business: Expired as of 12/31/2011 100% bonus first-year depreciation allowance for qualified property Section 179 expensingIncreased $500,000 expensing election under Code Sec. 179, with$2 million investment ceilingExpired for leasehold-improvement, restaurant and retail-improvement property Shortened recovery period of 15 years for specialized realty assets,including qualified leasehold improvement property, qualified restaurantproperty, and qualified retail improvement property Lower shareholder basis adjustments for charitable contributions by Scorporations Reduced S corporations recognition period for built-in gains tax4
  5. 5. Business: Expired as of 12/31/2011 Research credit under Code Sec. 41(h)(1)(B) Various other credits including:o Work opportunity tax credit (WOTC) for non-veterans under CodeSec.51(c)(4),o Credit for construction of new energy efficient homes under CodeSec.45L5
  6. 6. Business: Expiring as of 12/31/2012 Bonus Depreciationo The 50% bonus first-year depreciation for assets placed in servicefrom January 1, 2012, through December 31, 2012o Qualified assets include any new tangible property with a recoveryperiod of 20 years or less, computer software or qualifiedleasehold improvements No bonus depreciation after December 31, 20126
  7. 7. 7Section 179 expensing election Allows you to deduct rather than depreciateasset purchaseso Deduct up to $139,000 of purchaseso Deduction phases out dollar-for-dollar when 2012 assetpurchases exceed $560,000o Only Section 179 expensing can be applied to used assetso If asset purchases exceed phaseout threshold (or yourincome), consider 50% bonus depreciationTIP: The expensing limit and phaseout threshold have dropped fromtheir 2011 levels of $500,000 and $2 million, respectively. For 2013,these amounts are scheduled to drop again, to $25,000 and $200,000.If possible, purchase assets before year end.
  8. 8. Vehicle-related tax breaks Deduct out-of-pocket expenses (fuel, insurance,depreciation, etc.) or mileageo 55.5 cents per mile for 2012 Purchases of new or used vehicles may be eligible forSec. 179 expensing New vehicles may be eligible for bonus depreciation Depreciation limit is $3,160 for autos placedin service in 2012o Increased by $8,000 for autos eligiblefor bonus depreciation Additional rules and limits apply8
  9. 9. Business: Expiring as of 12/31/2012 The temporary payroll tax cut will no longer apply. The two percentagepoint cut in employee OASDI tax under FICA (from 6.2% to 4.2%)9
  10. 10. Individuals: Expired as of 12/31/2011 State and local sales tax deduction IRA charitable distribution AMT patch Personal credits allowed against regular tax & AMT tax $250 Educator expense Mortgage insurance premiums as interest $4000 Above the line deduction for qualified tuition and related expenses 100% Exclusion of gain from sale of certain small business stock10
  11. 11. Individuals: Expiring as of 12/31/2012 Temporary payroll tax cut Increase of 15% rate bracket for MFJ Reduced capital gains rate Reduced income tax rates Qualified dividend rate 10% Income tax rate11
  12. 12. Individuals: Expiring as of 12/31/2012 Liberalized child and dependent care credit rules American opportunity tax credit Refundable credit for prior year AMT Increased standard deduction for MFJ Repeal of limit on itemized deductions Repeal of personal exemption phase outs12
  13. 13. New Taxes 2013 and Beyond 3.8% Medicare tax on unearned income .9% Additional Medicare tax Higher threshold for itemized medical expense deductions13
  14. 14. AMT Triggers State and local income tax deductions Real estate and personal property tax deductions Miscellaneous itemized deductions subject to 2% of AGI floor Long-term capital gains and dividend income Accelerated depreciation adjustments and related gain or lossdifferences when assets are sold Tax-exempt interest on certain private-activity municipal bonds Incentive stock option exercises14
  15. 15. Avoiding AMT or reducing its impact Planning for AMT will be a challengeuntil Congress passes long-term relief AMT system isn’t regularly adjustedfor inflation Congress legislates adjustments,typically as a “patch”15
  16. 16. What to consider doing If subject to AMT this yearo Accelerate income and short-term capital gains into 2012o Defer expenses you can’t deduct for AMT purposes until 2013o Defer expenses you can deduct for AMT purposes to 2013 If subject to AMT next yearo Defer income until 2013o Prepay in 2012 expenses you can’t deduct for AMT purposeso Sell private activity municipal bonds whose interestcould be subject to the AMT before year end16
  17. 17. Timing of income and expenses is key Smart timing can reduce your tax liability Poor timing can unnecessarily increase it Tax rates are scheduled to rise in 201317
  18. 18. Estate/Gift Taxes: 2012 Estate and Generation Skipping Transfer TaxHighest Rate 35%Exemption $5,120,000 Gift TaxHighest Rate 35%Exemption $5,120,00018
  19. 19. Estate/Gift Taxes: 2013 Estate and Generation Skipping Transfer TaxHighest Rate 55%*Exemption $1,000,000 Gift TaxHighest Rate 55%*Exemption $1,000,000* A 5% surtax applies to estates of $10,000,000 until approximately$17,000,00019
  20. 20. 20Transfer tax exemptions and rates
  21. 21. 21Gift tax Gifts to spouse are tax-free under marital deduction Gift tax follows estate tax exemption andtop rate for 2012o Any gift tax exemption used during life reducesestate tax exemption available at death Exclude certain gifts of up to $13,000 per recipiento $26,000 per recipient if your spouse splits gift with youor you’re giving community propertyo Scheduled to increase to $14,000 in 2013
  22. 22. 22 2012 may be the year to make large giftso Potentially lock in the record-high $5.12 million gift tax exemptionwhile it’s availableo “Clawback” could reduce the tax advantages, but many expertsbelieve this is unlikelyo Remove future appreciation from your taxable estateTIP: Be sure to retain sufficient assetsto maintain your desired lifestyle.Tax-smart giving
  23. 23. Tax-smart giving Consider estate and income tax effects of giftso To minimize your estate tax, gift property withgreatest future appreciation potentialo To minimize your beneficiary’s income tax, gift propertythat hasn’t appreciated significantly since you’ve owned ito To minimize your own income tax, sell property that hasdeclined in value to take the tax loss and then gift the sale proceeds23
  24. 24. Tax-smart giving Plan gifts to grandchildren carefullyo Annual exclusion gifts are generally exemptfrom GST taxo For gifts that don’t qualify for the exclusionto be entirely tax-free, apply both yourGST tax exemption and gifttax exemption24
  25. 25.  Gift interests in your businesso Leverage gift tax exclusions and exemption bygifting ownership interests May be eligible for valuation discounts25TIP: The IRS may challenge the value, soa professional appraisal is strongly recommended.Tax-smart giving
  26. 26. Administration’s 2013 ProposalsIndividual Income Tax Possible limitations on itemized deductions Retain current rates for taxpayer with income below $250,000 (jointreturns) Allow rates to rise to pre-Bush era tax rates for those with income inexcess of $250,000.o 39.6% highest rate (including dividends)o 20% capital gain rate “Buffett rule” – taxpayers with over $1 million of income subject to 30%effective tax rate.26
  27. 27. Administration’s 2013 ProposalsEstate & Gift TaxESTATE TAX Exemption of $3,500,000 Top rate – 45%GIFT TAX Exemption of $1,000,000 Top rate – 45%27
  28. 28. Administration’s 2013 ProposalsBusiness Taxes Broaden base to cut corporation tax rate to 28% Simplify small business tax filings, allow up to $1 million expensing ofinvestments, and wider use of cash basis of accounting Provide manufacturing incentives, including R&D for domesticmanufacturers. Repeal the last-in, first-out (LIFO) accounting method for inventories Various changes to the international tax provisions Repeal of various oil and gas incentives Taxing carried interest as ordinary income28
  29. 29. 2012 Year End PlanningBusiness Taxes Consider acquiring automobiles, fixed assets, plant and equipment byyear end to take advantage of expiring accelerated deductions. Consider dividends from C corporations (or S corporations with earningsand profits) to take advantage of lower dividend rate. Consider taking money out of the business by way of a stockredemption. The buy-back may yield long-term capital gain or a dividend,depending on a variety of factors. Increase your basis in a partnership or S corporation if doing so willenable you to deduct a loss from it this year.29
  30. 30. 2012 Year End PlanningGift Taxes Consider gifts to maximize the current $5,120,000 exemption.30
  31. 31. 2012 Year End PlanningIndividual Taxes Consider “mining” capital gains to lock in tax at 15% bracket. Consider “electing out” of installment sales. Consider investment strategies to reduce impact of new 3.8% surtax in2013 (for example, use of tax free bonds). Consider IRA conversion to ROTH IRA to take advantage of lower taxrates. Consider timing of required minimum distribution from IRA/Pensionaccounts to reduce impact of new 3.8% surtax if turning 70 ½ in 2012. If possible, accelerate home sales that are taxable into 2012 to takeadvantage of lower capital gains rate and reduce impact of 3.8% surtax.31
  32. 32. Please contact us for assistance:610.668.4200www.isdanerllc.com[Insert your logo here]Thank You!

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