21 December 2017

Tips for year-end planning in light of the GOP tax bill

The GOP tax bill was approved by both the House and Senate and signed by the President. The current US tax reform initiative is the most ambitious attempt at rewriting the US tax code since 1986. Many of the provisions of the new bill will take effect as early as January 1, 2018.

We outline below certain detailed items for you to consider during your year-end tax planning, as well as some recommendations for early 2018:

  • Make payments in December of all state income tax due for 2017.
  • Make payments in December of all real estate taxes that may be due for 2017, and consider making payments of real estate taxes that would be payable in 2018.
  • Consider pre-payment of accrued local property taxes.
  • Make charitable contributions in December, including considering use of a private foundation, donor advised fund, or grantor charitable lead trust to make large, multi-year gifts.
  • Consider strategies for the deferral of unearned and earned income until 2018, when individual income tax rates may be lower than the current rates.
  • Consider recognizing capital gain that would be taken in 2018 and pay the state income taxes in December.
  • Consider gifting strategies for 2018, when the individual exemption amounts may be higher than the current exemption amounts; this may also require a review of testamentary estate plans that had included formula funding strategies.
  • Consider sale of self-created intellectual property, other than copyrights in musical works, which will lose favorable tax treatment in 2018.
  • Consider addressing pending divorce settlements involving alimony, as the alimony deduction will be unavailable for agreements entered into after 12/31/2018.
  • Partnership agreements should be addressed. Taking effect January 1, 2018, new partnership audit rules come into force.
  • Postpone any corporate income to 2018, when the corporate rate will drop to 21%.
  • Make payments of any home equity interest due in early 2018.
  • Delay the exercise of stock options or distributions from retirement plans until 2018.
  • Initiate like-kind exchanges for tangible property, such as artwork, before the end of 2017.
  • Make payments of miscellaneous itemized deductible expenses, such as investment expenses prior to 2018, when they will no longer be deductible.
  • Maximize deductible contributions to qualified retirement plans.
  • Look to basis increase planning inside CFC entities.
  • Review CFC subpart F exposure under post death check the box planning.


Trump GOP: US tax reform

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