The document discusses income tax planning strategies for 2012. It notes that income tax rates are scheduled to increase in 2013 when the Bush tax cuts expire. This creates opportunities to harvest capital gains in 2012 by selling appreciated assets and repurchasing similar assets. It also discusses accelerating income into 2012 to take advantage of lower 2012 tax rates and avoiding the new 3.8% Medicare surtax that takes effect in 2013.
2013 Changes in Tax Law and Year End Tax Planning Opportunities
Individuals
o 2013 tax rates
o Tax on investment income
o Other changes in tax law affecting individuals
o Year end planning opportunities
Businesses
o Employment tax
o Depreciation
o Pass-through entities
Estate and Gift Tax
o Exemption amounts
o Tax rates
o Gifting strategies
o Valuation discounts
o Grantor trusts
2013 Changes in Tax Law and Year End Tax Planning Opportunities
Individuals
o 2013 tax rates
o Tax on investment income
o Other changes in tax law affecting individuals
o Year end planning opportunities
Businesses
o Employment tax
o Depreciation
o Pass-through entities
Estate and Gift Tax
o Exemption amounts
o Tax rates
o Gifting strategies
o Valuation discounts
o Grantor trusts
This powerpoint training is the slides from the webinar I did on the taxing of social security and is placed on our training site.
If you want more training on annuities, selling or building your book of business visit us at www.7figuresalestools.com
Tax Changes 2013 / 2014 and Their ImpactPeter Pfister
Peter Pfister, Parter at The Curchin Group, CPAs, shares insight into the tax changes in 2013 and their future impact on businesses and individuals as well as what is likely to happen in 2014.
With the elimination of the personal exemption in 2018, some large families could experience increased state-level taxes. In states where families trend to larger sizes, such as Utah, the State Tax Commission anticipates tens-of-millions in surplus revenues as a result of the personal exemption elimination.
What does the budget means for you and your clients and, importantly, any tax planning opportunities for high net worth individuals and business owners.
Most observers do not believe that further curbs on public spending can reduce our debts to an acceptable level, thus suggesting that George will have to increase taxes in a way that will not hurt the average citizen. It also suggests that hopes of reforms that reduce tax yields are likely to prove unrealistic. In particular, an increase in the IHT limit (other than the promised limited relief for family homes) seems unlikely. We also expect further pain for non-doms and tax avoiders. We think that some tax relief for small businesses is likely, but as such businesses create scope for tax evasion and avoidance, we are sceptical as to how helpful these are likely to be in practice.
Original air date: Jan. 25, 2018
Recording available at http://www.mhmcpa.com
The tax reform bill was signed into law on Dec. 22, 2017, bringing sweeping and historic changes to our country’s tax laws. These changes generally are effective in 2018 and impact every taxpayer. International taxation received significant changes, with provisions related to participation exemption, mandatory repatriation tax, U.S. base erosion, global intangible low-taxed income, foreign-derived intangible income, foreign tax credits, Subpart F, and sale of partnership interests.
We will focus on the manner in which international businesses are impacted by the new law, and will offer insight about how international businesses and investors should respond to the new provisions.
We want to help you manage your tax activities and simplify complex tax laws. We hope you’ll find that our 2014 Quick Tax Facts guide helps you do just that. This handy guide compiles frequently changing tax information applicable to most businesses and households.
A Charitable Remainder Trust is a split interest trust consisting of an income interest, which is paid to the donor or other beneficiary during the term of the trust, and a remainder interest, which is paid to the designated charity. The purpose of this strategy is to harbor net investment income in a tax-exempt environment while leveling income over a longer period of time to keep MAGI below the threshold amount. CRTs are especially useful when there is a large capital gain that pushes income above the threshold amount.
GROWING AND PRESERVING ASSETS THROUGH TAX AND ESTATE PLANNING - Tina Davis, C...IFG Network marcus evans
Presentation by Tina Davis Milligan, CPA, Managing Director, Family Office Services, CTC | myCFO - Speaker at the IFG Wealth Management Forum Oct 2015 at the Trump Doral in FL
This powerpoint training is the slides from the webinar I did on the taxing of social security and is placed on our training site.
If you want more training on annuities, selling or building your book of business visit us at www.7figuresalestools.com
Tax Changes 2013 / 2014 and Their ImpactPeter Pfister
Peter Pfister, Parter at The Curchin Group, CPAs, shares insight into the tax changes in 2013 and their future impact on businesses and individuals as well as what is likely to happen in 2014.
With the elimination of the personal exemption in 2018, some large families could experience increased state-level taxes. In states where families trend to larger sizes, such as Utah, the State Tax Commission anticipates tens-of-millions in surplus revenues as a result of the personal exemption elimination.
What does the budget means for you and your clients and, importantly, any tax planning opportunities for high net worth individuals and business owners.
Most observers do not believe that further curbs on public spending can reduce our debts to an acceptable level, thus suggesting that George will have to increase taxes in a way that will not hurt the average citizen. It also suggests that hopes of reforms that reduce tax yields are likely to prove unrealistic. In particular, an increase in the IHT limit (other than the promised limited relief for family homes) seems unlikely. We also expect further pain for non-doms and tax avoiders. We think that some tax relief for small businesses is likely, but as such businesses create scope for tax evasion and avoidance, we are sceptical as to how helpful these are likely to be in practice.
Original air date: Jan. 25, 2018
Recording available at http://www.mhmcpa.com
The tax reform bill was signed into law on Dec. 22, 2017, bringing sweeping and historic changes to our country’s tax laws. These changes generally are effective in 2018 and impact every taxpayer. International taxation received significant changes, with provisions related to participation exemption, mandatory repatriation tax, U.S. base erosion, global intangible low-taxed income, foreign-derived intangible income, foreign tax credits, Subpart F, and sale of partnership interests.
We will focus on the manner in which international businesses are impacted by the new law, and will offer insight about how international businesses and investors should respond to the new provisions.
We want to help you manage your tax activities and simplify complex tax laws. We hope you’ll find that our 2014 Quick Tax Facts guide helps you do just that. This handy guide compiles frequently changing tax information applicable to most businesses and households.
A Charitable Remainder Trust is a split interest trust consisting of an income interest, which is paid to the donor or other beneficiary during the term of the trust, and a remainder interest, which is paid to the designated charity. The purpose of this strategy is to harbor net investment income in a tax-exempt environment while leveling income over a longer period of time to keep MAGI below the threshold amount. CRTs are especially useful when there is a large capital gain that pushes income above the threshold amount.
GROWING AND PRESERVING ASSETS THROUGH TAX AND ESTATE PLANNING - Tina Davis, C...IFG Network marcus evans
Presentation by Tina Davis Milligan, CPA, Managing Director, Family Office Services, CTC | myCFO - Speaker at the IFG Wealth Management Forum Oct 2015 at the Trump Doral in FL
"2012/2013 Income, Estate and Gift Tax Changes a Result of the 'Fiscal Cliff'...Dinsmore & Shohl LLP
"2012/2013 Income, Estate and Gift Tax Changes a Result of the 'Fiscal Cliff'," Financial Planning Association of Southwestern Ohio, Election Preview Virtual Conference
The 2011 Tax Guide provides you with a summary of the 2010 Tax Relief Act, and guidelines on:
Tax rates
Payroll taxes
Retirement
Dividends and capital gains
AMT
Estate and gift taxes
Education tax breaks
Canadian Tax Insights: How High Net Worth Investors Should Navigate Today’s T...Nicola Wealth
In this webinar, Nicola Wealth CEO, John Nicola will address timely taxation topics to help you understand the developments in Canadian tax policy in relation to the taxation of homes, wealth, capital gains, and marginal tax rates. John will further prepare you to navigate the current tax environment by reviewing several tax planning options available to you and how these strategies integrate with overall portfolio design.
The election is over - now what? We recently held free tax planning and preparation seminars discussing the tax consequences of the 2012 election.
The seminar featured Steven Hartstein, CPA, JD - Partner, and Jenna Staton, EA - Manager, and covered several topics including:
•Year end tax planning for individuals and businesses
•Year end tax planning using the estate and gift tax laws for 2012
•2013 tax law if no changes are made
•What the future holds based upon post-election Congress
If you have questions, please feel free to contact our Tax Planning & Preparation Group at 440-449-6800.
GAMABrief: Preparing for the Capital Gains Tax HikeChristina Gagnier
Tax season is just around the corner and changes to the capital gains tax rates will affect taxpayers filing their returns at the beginning of 2014. If you sold capital assets during 2013, you might be subject to the increased rates. This brief provides important information on preparing for the capital gains tax hike.
Capital gains tax is the tax on capital asset profits—the profit made from selling an item bought for personal investment. On January 1, 2013, the government passed the American Taxpayer Relief Act of 2012 (ATRA). The ATRA added a top federal income bracket of 39.6% and increased the long-term capital gains tax rate to 20% starting in the 2013 tax year.
This presentation includes an overview of tax changes from 2012 and what's new in 2013.
For more information about our tax services, visit www.cbiz.com
Tax Foundation University 2017, Part 5: Details of the Nunes, Cardin, Trump, ...Tax Foundation
This Tax Foundation University Online lecture takes a look at a few major tax reform plans including:
— The Nunes plan to reform business taxation
— Senator Cardin's progressive consumption tax
— The Trump Administration's tax plan
— The House GOP Tax Reform Blueprint
We also discuss these plans in the context of international taxation and teach you a little bit about the Value Added Tax (VAT).
Tax Foundation University 2017, Part 1: Why Tax Reform? Why Now? Why Not Just...Tax Foundation
This presentation reviews key considerations in tax reform – balancing revenues, growth, and tax equity.
Charts describe the current tax system, its general framework, progressive structure, complexity, biases, and distorting features.
It also explores who pays taxes, and how markets shift the tax burden.
There are a number of ways you can reduce your 2015 tax bill. From mitigating the effect of the Net Investment Income Tax to ideas for retirement and estate planning, CBIZ MHM has outlined several tips you can use for your year end planning in our 2015 Individual Tax Planning Supplement. We encourage you to carefully consider how the strategies discussed in the supplement will benefit you and your family. You can also contact your local CBIZ MHM professional for more information.
Although you can’t avoid taxes, you can take steps to minimize them. This requires proactive tax planning — estimating your tax liability, looking for ways to reduce it and taking timely action.
2021 Tax Savings Ideas for Individuals and Businesses.
This presentation and these materials are designed to provide information in regard to the subject matter
covered. This presentation and these materials are provided solely as a teaching tool, with the
understanding that Stephen Moskowitz, Moskowitz LLP, and the instructor are not engaged in rendering
legal, accounting, or other professional service and that they are not offering such advice in this
presentation and these accompanying materials.
The Tax Diversify Your Retirement Income with Life Insurance sales presentation will help you understand the importance of tax diversification and the benefits that a Custom Whole Life (CWL) policy can provide. In addition to the traditional benefit of death benefit protection, the cash value of the CWL policy accumulates tax-deferred and can generally be accessed on a tax-free basis*.
Use the concept presentation and other materials to discuss how life insurance not only provides death benefit protection, but can also be a tax diversification tool.
Contact me if you would like to discuss
*The cash value is accessed through policy loans, which accrue interest at the current rate, and cash withdrawals. Loans and withdrawals will decrease the total death benefit and total cash value. The supplemental retirement income is not guaranteed.
With the passage and implementation of the Tax Cuts and Jobs Act (TCJA), comes a lot of changes for taxpayers to wrap their heads around – but we’re up to the challenge.
Even with all the information floating around these days, it’s easy to overlook or misinterpret how the law works. Don’t worry; with this presentation, we'll provide you the important tips and insights surrounding this law.
This presentation discusses the American Taxpayer Relief Act of 2012, better known as the “fiscal cliff” legislation, extended many key tax provisions from the Bush era for both individuals and businesses. Also addressed were the key tax provisions contained in this Act as well as a number of other tax planning issues that you should be aware of this year.
This presentation was part of a CPE webinar. Full details at http://www.macpas.com/webinar-recap-2013-tax-update/.
More info at www.macpas.com
Currently pi network is not tradable on binance or any other exchange because we are still in the enclosed mainnet.
Right now the only way to sell pi coins is by trading with a verified merchant.
What is a pi merchant?
A pi merchant is someone verified by pi network team and allowed to barter pi coins for goods and services.
Since pi network is not doing any pre-sale The only way exchanges like binance/huobi or crypto whales can get pi is by buying from miners. And a merchant stands in between the exchanges and the miners.
I will leave the telegram contact of my personal pi merchant. I and my friends has traded more than 6000pi coins successfully
Tele-gram
@Pi_vendor_247
Poonawalla Fincorp and IndusInd Bank Introduce New Co-Branded Credit Cardnickysharmasucks
The unveiling of the IndusInd Bank Poonawalla Fincorp eLITE RuPay Platinum Credit Card marks a notable milestone in the Indian financial landscape, showcasing a successful partnership between two leading institutions, Poonawalla Fincorp and IndusInd Bank. This co-branded credit card not only offers users a plethora of benefits but also reflects a commitment to innovation and adaptation. With a focus on providing value-driven and customer-centric solutions, this launch represents more than just a new product—it signifies a step towards redefining the banking experience for millions. Promising convenience, rewards, and a touch of luxury in everyday financial transactions, this collaboration aims to cater to the evolving needs of customers and set new standards in the industry.
Empowering the Unbanked: The Vital Role of NBFCs in Promoting Financial Inclu...Vighnesh Shashtri
In India, financial inclusion remains a critical challenge, with a significant portion of the population still unbanked. Non-Banking Financial Companies (NBFCs) have emerged as key players in bridging this gap by providing financial services to those often overlooked by traditional banking institutions. This article delves into how NBFCs are fostering financial inclusion and empowering the unbanked.
Turin Startup Ecosystem 2024 - Ricerca sulle Startup e il Sistema dell'Innov...Quotidiano Piemontese
Turin Startup Ecosystem 2024
Una ricerca de il Club degli Investitori, in collaborazione con ToTeM Torino Tech Map e con il supporto della ESCP Business School e di Growth Capital
how to swap pi coins to foreign currency withdrawable.DOT TECH
As of my last update, Pi is still in the testing phase and is not tradable on any exchanges.
However, Pi Network has announced plans to launch its Testnet and Mainnet in the future, which may include listing Pi on exchanges.
The current method for selling pi coins involves exchanging them with a pi vendor who purchases pi coins for investment reasons.
If you want to sell your pi coins, reach out to a pi vendor and sell them to anyone looking to sell pi coins from any country around the globe.
Below is the contact information for my personal pi vendor.
Telegram: @Pi_vendor_247
how to sell pi coins in South Korea profitably.DOT TECH
Yes. You can sell your pi network coins in South Korea or any other country, by finding a verified pi merchant
What is a verified pi merchant?
Since pi network is not launched yet on any exchange, the only way you can sell pi coins is by selling to a verified pi merchant, and this is because pi network is not launched yet on any exchange and no pre-sale or ico offerings Is done on pi.
Since there is no pre-sale, the only way exchanges can get pi is by buying from miners. So a pi merchant facilitates these transactions by acting as a bridge for both transactions.
How can i find a pi vendor/merchant?
Well for those who haven't traded with a pi merchant or who don't already have one. I will leave the telegram id of my personal pi merchant who i trade pi with.
Tele gram: @Pi_vendor_247
#pi #sell #nigeria #pinetwork #picoins #sellpi #Nigerian #tradepi #pinetworkcoins #sellmypi
how to sell pi coins effectively (from 50 - 100k pi)DOT TECH
Anywhere in the world, including Africa, America, and Europe, you can sell Pi Network Coins online and receive cash through online payment options.
Pi has not yet been launched on any exchange because we are currently using the confined Mainnet. The planned launch date for Pi is June 28, 2026.
Reselling to investors who want to hold until the mainnet launch in 2026 is currently the sole way to sell.
Consequently, right now. All you need to do is select the right pi network provider.
Who is a pi merchant?
An individual who buys coins from miners on the pi network and resells them to investors hoping to hang onto them until the mainnet is launched is known as a pi merchant.
debuts.
I'll provide you the Telegram username
@Pi_vendor_247
how to sell pi coins at high rate quickly.DOT TECH
Where can I sell my pi coins at a high rate.
Pi is not launched yet on any exchange. But one can easily sell his or her pi coins to investors who want to hold pi till mainnet launch.
This means crypto whales want to hold pi. And you can get a good rate for selling pi to them. I will leave the telegram contact of my personal pi vendor below.
A vendor is someone who buys from a miner and resell it to a holder or crypto whale.
Here is the telegram contact of my vendor:
@Pi_vendor_247
What price will pi network be listed on exchangesDOT TECH
The rate at which pi will be listed is practically unknown. But due to speculations surrounding it the predicted rate is tends to be from 30$ — 50$.
So if you are interested in selling your pi network coins at a high rate tho. Or you can't wait till the mainnet launch in 2026. You can easily trade your pi coins with a merchant.
A merchant is someone who buys pi coins from miners and resell them to Investors looking forward to hold massive quantities till mainnet launch.
I will leave the telegram contact of my personal pi vendor to trade with.
@Pi_vendor_247
how to sell pi coins on Bitmart crypto exchangeDOT TECH
Yes. Pi network coins can be exchanged but not on bitmart exchange. Because pi network is still in the enclosed mainnet. The only way pioneers are able to trade pi coins is by reselling the pi coins to pi verified merchants.
A verified merchant is someone who buys pi network coins and resell it to exchanges looking forward to hold till mainnet launch.
I will leave the telegram contact of my personal pi merchant to trade with.
@Pi_vendor_247
Falcon stands out as a top-tier P2P Invoice Discounting platform in India, bridging esteemed blue-chip companies and eager investors. Our goal is to transform the investment landscape in India by establishing a comprehensive destination for borrowers and investors with diverse profiles and needs, all while minimizing risk. What sets Falcon apart is the elimination of intermediaries such as commercial banks and depository institutions, allowing investors to enjoy higher yields.
The European Unemployment Puzzle: implications from population agingGRAPE
We study the link between the evolving age structure of the working population and unemployment. We build a large new Keynesian OLG model with a realistic age structure, labor market frictions, sticky prices, and aggregate shocks. Once calibrated to the European economy, we quantify the extent to which demographic changes over the last three decades have contributed to the decline of the unemployment rate. Our findings yield important implications for the future evolution of unemployment given the anticipated further aging of the working population in Europe. We also quantify the implications for optimal monetary policy: lowering inflation volatility becomes less costly in terms of GDP and unemployment volatility, which hints that optimal monetary policy may be more hawkish in an aging society. Finally, our results also propose a partial reversal of the European-US unemployment puzzle due to the fact that the share of young workers is expected to remain robust in the US.
If you are looking for a pi coin investor. Then look no further because I have the right one he is a pi vendor (he buy and resell to whales in China). I met him on a crypto conference and ever since I and my friends have sold more than 10k pi coins to him And he bought all and still want more. I will drop his telegram handle below just send him a message.
@Pi_vendor_247
USDA Loans in California: A Comprehensive Overview.pptxmarketing367770
USDA Loans in California: A Comprehensive Overview
If you're dreaming of owning a home in California's rural or suburban areas, a USDA loan might be the perfect solution. The U.S. Department of Agriculture (USDA) offers these loans to help low-to-moderate-income individuals and families achieve homeownership.
Key Features of USDA Loans:
Zero Down Payment: USDA loans require no down payment, making homeownership more accessible.
Competitive Interest Rates: These loans often come with lower interest rates compared to conventional loans.
Flexible Credit Requirements: USDA loans have more lenient credit score requirements, helping those with less-than-perfect credit.
Guaranteed Loan Program: The USDA guarantees a portion of the loan, reducing risk for lenders and expanding borrowing options.
Eligibility Criteria:
Location: The property must be located in a USDA-designated rural or suburban area. Many areas in California qualify.
Income Limits: Applicants must meet income guidelines, which vary by region and household size.
Primary Residence: The home must be used as the borrower's primary residence.
Application Process:
Find a USDA-Approved Lender: Not all lenders offer USDA loans, so it's essential to choose one approved by the USDA.
Pre-Qualification: Determine your eligibility and the amount you can borrow.
Property Search: Look for properties in eligible rural or suburban areas.
Loan Application: Submit your application, including financial and personal information.
Processing and Approval: The lender and USDA will review your application. If approved, you can proceed to closing.
USDA loans are an excellent option for those looking to buy a home in California's rural and suburban areas. With no down payment and flexible requirements, these loans make homeownership more attainable for many families. Explore your eligibility today and take the first step toward owning your dream home.
Even tho Pi network is not listed on any exchange yet.
Buying/Selling or investing in pi network coins is highly possible through the help of vendors. You can buy from vendors[ buy directly from the pi network miners and resell it]. I will leave the telegram contact of my personal vendor.
@Pi_vendor_247
1. Income Tax Planning
Strategies for 2012
Jon P. Karp, CPA, PFS
Whitley Penn, LLP
8343 Douglas Avenue, Suite 400
Dallas, TX 75225
Direct: (214) 393-9400
Main: (214) 393-9300
Fax: (214) 393-9401
Email: jon.karp@whitleypenn.com
Circular 230 Disclosure: To ensure compliance with requirements
imposed by the IRS, we inform you that any U.S. federal tax advice
contained in this communication, including attachments, was not
written to be used and cannot be used for the purpose of (i)
avoiding tax-related penalties under the Internal Revenue Code or
(ii) promoting, marketing or recommending to another party any
tax-related matters addressed herein. If you would like a written
opinion upon which you can rely for the purpose of avoiding
penalties, please contact us.
2. The Fiscal Cliff
• http://www.youtube.com/
watch?v=bjTb_c4Mq48&fea
ture=player_detailpage
2
3. Increasing Tax Rates in 2013
• Bush tax cuts scheduled to expire at the end of 2012
• Rates will likely be higher in 2013
• Creates planning opportunities for the rest of 2012
3
4. 2012 Income Tax Brackets
Married Married
Qualified Filing Filing Head of
Single Widow(er) Jointly Separately Household
10% Tax Rate $8,700 $17,400 $17,400 $8,700 $12,400
15% Tax Rate $35,350 $70,700 $70,700 $35,350 $47,350
25% Tax Rate $85,650 $142,700 $142,700 $71,350 $122,300
28% Tax Rate $178,650 $217,450 $217,450 $108,725 $198,050
33% Tax Rate $388,350 $388,350 $388,350 $194,175 $388,350
35% Tax Rate > $388,350 > $388,350 > $388,350 > $194,175 > $388,350
• Capital Gain Rates
– 0% rate if you are in the 10% or 15% bracket
– 15% rate if you are in the 25%, 28%, 33% or 35% bracket
4
5. 2012 vs. 2013 Tax Rates
Comparison of 2012 vs. 2013 Tax Rates
Long-Term
Ordinary Income
Capital Gains
2013 &
2012 Beyond
2012 2013& Beyond*
10% 15%
0% 10%
15% 15%
15% 20% (23.8%
25% 28% if surtax
28% 31% applies
33% 36%
35% 39.6%
5
6. 2012 Income Tax Planning Opportunities
Gain Harvesting
Accelerating income into 2012
Avoiding the 3.8% Medicare surtax
6
7. Gain Harvesting
• Sell assets with long-term capital gains in 2012 to take
advantage of low 2012 rates
• Repurchase same or similar assets
• Sell assets whenever you would have sold them
otherwise
7
8. Gain Harvesting--Tradeoff
• On the surface, it appears that taxpayers should always harvest
gains
• But, the gain harvesting strategy introduces a tradeoff
between lower tax rates and loss of tax deferral
• You pay tax at a lower rate but you pay it sooner
• Paying the capital gains tax in 2012 could be thought of as an
investment to avoid paying a larger amount of tax in the future
• Conceptualizing the transaction in this way enables you to
calculate a return on investment (ROI) for the 2012 tax
payment
8
9. ROI Calculation--Example
• Facts
– Bill owns XYZ stock that he has held for several years with a basis of $50,000 and FMV of
$100,000
– His tax rate on LTGs is 15% in 2012 and 23.8% in 2013
– Bill sells the stock in 2012, recognizing a long-term capital gain of $50,000 and paying tax of
$7,500
– He repurchases the stock the following day
– The stock grows at 5% per year
– Bill sells the repurchased stock at some future date
9
10. Example—Results
• The following chart shows how Bill’s ROI on the $7,500
investment varies depending on the year of the second
sale Year ROI
2013 54.86%
2014 22.82%
2015 13.61%
2016 9.21%
2017 6.59%
2018 4.84%
2019 3.55%
2020 2.55%
10
11. Should you Harvest Gains?
Easy Cases
• Very short time horizon
– Gain harvesting will almost always be favorable because the benefit of tax deferral is small
• Very long time horizon
– Gain harvesting will almost always be unfavorable because the benefit of tax deferral is large
• Taxpayer in the 0% long-term capital gains bracket in 2012
– Gain harvesting will always be favorable from a tax perspective because it gives you a free
basis step up
• Taxpayer plans to die with assets and pass them on to heirs with a stepped-up basis
– Gain harvesting unfavorable because any gain would have been wiped out at death
• Taxpayer has realized loss carryovers from prior years
– Losses would be better used to offset gains in later years when long-term capital gains rates
are higher
11
12. Should You Harvest Gains?
More Difficult Fact Patterns
• In many cases, the answer will not be clear without doing a ROI calculation
• Use AICPA software
• Decision Rule:
• Harvest gains when ROI > opportunity cost of capital
• Opportunity Cost of Capital
– What rate of return could you have expected if you had invested the
money used to pay the 2012 tax in an alternative investment with
comparable risk?
12
13. Gain Harvesting--Caveat
• IRS might try to apply the economic substance doctrine (IRC §
7701(o))
• 20% penalty if sale/repurchase lacks economic substance
• 40% if transaction not reported on tax return
• Penalty might apply if you repurchased the same asset
immediately after the gain harvesting sale
• Safer to repurchase assets that are similar but not identical,
leave the sale proceeds in cash and/or put a significant amount
of time between the sale and repurchase
13
14. Accelerating Income to 2012
• Certain types of ordinary income can be accelerated into 2012:
– Bond interest
– Annuity income
– Traditional IRA income
– Compensation income
– Stock options
– Roth Conversions
14
15. Accelerating Interest Income--Example
Art is current in the 35% ordinary income tax bracket
On December 22, 2012, he has $100,000 of accrued bond interest
that will be paid on 1/3/2013.
Art sells the bonds at par on that date, paying $35,000 in tax
If Art had waited until 2013 to recognize the interest income he
would have paid tax at a 43.4% rate (counting the surtax)
Thus, the interest harvesting strategy saves Art $8,400 ($43,400 -
$35,000)
15
16. 3.8% Medicare Surtax
• Imposed on individuals, trusts and estates for tax years
beginning on and after January 31, 2013
• Applies to the lesser of:
– Net investment income (NII), or
– MAGI over an applicable threshold amount (ATA)
16
17. Net Investment Income
• Included items
– Interest
– Dividends
– Rents
– Annuities
– Capital gains
– Royalties
– Passive activity income
17
18. Net Investment Income
• Items specifically excluded
– Self-employment income
– Non-resident aliens
– Active Trade or business income
– Gain on the sale of an active interest in partnership or
S corporation
– IRA or qualified plan distributions
– Trusts for charity (except Charitable lead trusts)
18
19. MAGI
• Amount reported at bottom of page 1, Form 1040 (AGI)
• + net amount excluded as foreign earned income under
section 911(a)(1)
• For most taxpayers it is the same as AGI
19
20. 3.8% Surtax -Example
• Warren, a single taxpayer, has $170,000 of investment income
and received a $65,000 required minimum distribution (RMD)
from his traditional IRA in 2013.
• The RMD is not NII, but it is included in MAGI, increasing it to
$235,000
• The surtax applies to the lesser of NII ($170,000) or the excess
of MAGI over the $200,000 threshold amount for single
taxpayers ($35,000).
• Thus, $35,000 is subject to the surtax and the amount payable
is $1,330 (.038 x $35,000).
20
21. Applicable Threshold Amounts
• Married taxpayers filing jointly...........$250,000
• Married taxpayers filing separately....$125,000
• All other individual taxpayers.............$200,000
21
22. Minimizing the Surtax
• Strategiestoreducenetinvestmentincome--
– Tax exempt bonds
– Tax deferred annuities
– Life insurance
– Rental real estate
– oil and gas investments
– choice of accounting year for trusts and estates
– timing of estate and trust distributions
• StrategiestoreduceMAGI--
– Roth IRA conversions
– charitable remainder trusts
– charitable lead trusts
– Installment sales
– above-the-line deductions
22
24. Circular 230 Disclosure
Pursuant to the rules of professional conduct set forth in Circular 230, as promulgated
by the United States Department of the Treasury, nothing contained in this
communication was intended or written to be used by any taxpayer for the purpose of
avoiding penalties that may be imposed on the taxpayer by the Internal Revenue
Service, and it cannot be used by any taxpayer for such purpose. No one, without our
express prior written permission, may use or refer to any tax advice in this
communication in promoting, marketing, or recommending a partnership or other entity,
investment plan or arrangement to any other party.
For discussion purposes only. This work is intended to provide general information
about the tax and other laws applicable to retirement benefits. The author, his firm or
anyone forwarding or reproducing this work shall have neither liability nor responsibility
to any person or entity with respect to any loss or damage caused, or alleged to be
caused, directly or indirectly by the information contained in this work. This work does
not represent tax, accounting, or legal advice. The individual taxpayer is advised to
and should rely on their own advisors.
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