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Year-end tax highlights

Deferring income and accelerating deductions quite often presents itself as a tax planning opportunity. This year, it could be even more beneficial.  Given the recent election results and potential shifts on the horizon, it’s important to consider some prospective changes.  Possible changes for 2017 include lower tax rates, elimination of the 3.8% net investment income tax (NIIT), limitations on itemized deductions, and elimination of the alternative minimum tax (AMT). Here are some planning opportunities to consider:

Individual Planning Tips:

  • Accelerate itemized deductions such as charitable contributions and state tax payments.
  • Harvest capital losses to reduce investment income subject to the 3.8% NIIT.
  • Consider delaying until 2017 the sale of capital assets that will be subject to the 3.8% NIIT.
  • Maximize retirement plan contributions.
  • Donate part or all of your required minimum distribution to charity.
  • When deciding whether or not to exercise incentive stock options, consider the possible elimination of the AMT.

Business Planning Tips:

  • Purchase and put into service capital assets and certain real property improvements before year end.
  • Defer billing for services or products if using the cash basis method of reporting income.
  • Cash basis taxpayers – pay as many deductible expenses as possible before year end.
  • Accrual basis taxpayers – Make sure to record and recognize expenses incurred in 2016 that won’t be paid until 2017.

As 2017 approaches, we’re here to be a resource and a guide for you. These planning opportunities may or may not be the right choice for your particular tax situation.   Please contact us today with any questions or to set up a more in depth meeting.