December 1, 2017
Another year is winding down and it is time for the Annual Newsletter which is being posted to Our Website this year. Delivery this year is different with the main reason being that since so much is unsettled in Washington, I wanted this “Tome of Tax Wisdom” to be as timely as it can be and that means having the ability to make changes as they occur as well as giving you the opportunity to become acquainted with our revamped Website @ www.piasecki.cpa.
The true purpose of this Letter is really to wish you and yours the very best of the 2017 Holiday Season and a very Healthy Happy New Year!! We appreciate your friendship and loyalty each and every day and hope to continue with your trust for a very long time to come.
On an Office note, we recently renewed the Lease at 40 Richards Avenue in Norwalk. Hard to believe we have been here for five years. The Office has new paint and carpet so come on in and take a look. I can usually guarantee some goodies in the Reception Area and a hot cup of coffee or tea ready to be whipped up for you.
On a personal family note, I am proud to announce that my son Cammann graduated from Penn State Law and has passed the New York Bar and took a position with the Big 4 Accounting Firm KPMG. I am proud of him and just hope he learns enough to eventually retire Dear Ole Dad. Christopher, my older Son, added the Maine Bar Exam to go along with Massachusetts and is currently working in Portland. It was a Graduation in the wilds of State College, PA followed with a trek to Maine the following day for Chris’s Swearing In. Glad I didn’t take the low mileage Leasing Option! Just been wondering where did I go wrong in producing not one but TWO Attorneys? The Dinner Table has become much more interesting for sure. Is an Attorney ever wrong? 😊 I am very proud of them both as you may have noticed!!
As in prior years and in keeping with Tradition, we made donations to Various Charities in lieu of Holiday Cards. One of which, I am very proud to have served on the Board for the past 22 years is Milestones Behavioral Services (formerly The Connecticut Center for Childhood Development) which supports children and adults on the Autism Spectrum as well as other diagnoses. Needs are even greater now for people in these Communities in light of our current fiscal difficulties at the State and Federal Level. Many of us have personal experience and our help is now needed even more. I do know so many of you (from your Tax Returns!) do your share in supporting those that may not be as blessed as we are. Thank you for all you do!
So, what is going on in Washington? Only the Greatest Tax Reform Movement since the Days of Ronald Regan are supposedly in store for us. Based on what I am reading, that is exactly what will happen, IF and WHEN it happens. I have learned from experience, that until a Bill is signed by the President, never assume anything! Not quite so sure I am seeing the simplification either yet nor are we packing up the files quite yet either due to us Tax Professionals being made obsolete.
As I watch these Proposals go back and forth between the Senate and the Congress, there are many things the same and some differences. It is my early opinion that many of us in the New England area will be affected by the elimination of SALT deductions (State and Local Taxes- income taxes, personal property taxes and the like) and will have an impact on our tax bills, good or not so good. Also on the block is lowering interest deduction on mortgages (currently over $1.1 million) down to $500,000 along with interest on second homes. One Version will eliminate Real Estate Taxes entirely and the other will cap those taxes at $10,000 per year. So, what do we do now? We are awaiting implementation dates and most importantly “grandfather” carve outs. I think the prepayment of those taxes might be in order, but we still have Alternative Minimum Taxes in play for 2017 which may eliminate that tax savings anyway! There is great trumpeting of the repeal of the Alternative Minimum Tax (AMT) which may seem to be a great reform but remember but when you eliminate the State and Local Taxes and Real Estate Taxes under the regular tax system, the AMT tax might no longer an issue anyway! Smoke and Mirrors might happen to be the term popping into my head BUT there is a much higher standard deduction! I am hoping the powers that be will come to some resolution soon. Most likely right after I finish this and post it of course! There are many more of these thoughts in the following paragraphs and just remember that “one size does not fit all” and you have to examine your individual situation and feel free to call us at any time to discuss.
On the State front here in Connecticut, we are also facing severe issues. I have been part of many discussions on the “cost” of staying in Connecticut as I have had in the past few years. I have seen so many people evaluating the reasons to stay in Connecticut and unfortunately those reasons are becoming less and less. It is not only tax and cost of living but also the need to be closer to family that might not able to stay in Connecticut due to the high cost. There was even talk in Hartford of offering tax incentives to stop the “brain drain” of our youth to other states. Of course, no point stopping the young leaving if our Companies are also packing up. I am not seeing anything other than more tax increases on the upper income taxpayers coming up! I have mentioned this to several politicians that Residents are quietly voting with their feet and they need to react and fast. One response I read was that even though our costs are high we do offer “value”. Hmmmmmmmmmmmmm….
After that diatribe and my increasing blood pressure, I want to again remind you as to the purpose of this Annual Letter is too wish you and yours the very best Holiday Season and a Healthy and Happy 2018! Thank you all for your trust and patronage and your referrals of friends and family. It is my extreme pleasure to know you and your Families, to work with you, and for you. I am so blessed to have such a rewarding job and I have you to thank for it.
2017 YEAR-END INCOME TAX PLANNING FOR INDIVIDUALS
With year-end approaching, this is the time I “normally” suggest possible year-end tax strategies for our clients. However, as noted above, from a tax-planning standpoint, 2017 is not a “normal” year. For the first time in over 30 years, we are facing the real possibility that Congress could pass major tax reform legislation, which could happen by the end of this year. As I was writing this letter, the House Ways and Means Committee had recently released (on November 2, 2017) the initial draft of its Tax Reform Bill which, if enacted, would make significant changes impacting individuals. For example, if enacted, this proposed legislation would: Lower individual tax rates; Substantially increase the standard deduction; Reduce and/or eliminate most itemized deductions; Eliminate the alternative minimum tax. We have included in this letter a general overview of key provisions in this recently-released proposed legislation.
Caution: The status of this legislation is fluid. It is not possible to predict with precision what changes will be included in any “final” tax bill, when it will be passed, or even whether final tax reform legislation will be passed at all. Moreover, many of the changes that are currently being discussed could be modified or even dropped altogether in the final legislation.
Notwithstanding the uncertainty of tax reform, this letter outlines certain traditional year-end tax planning strategies you should consider. Traditional year-end tax planning strategies include deferring “income” to a later year and accelerating “deductions” into the current year. If tax reform legislation passes this year, these strategies may prove even more beneficial than expected. For example, the proposed legislation calls for a reduction in tax rates. If tax rate reduction is enacted and becomes effective in 2018, there will likely be many more individuals in higher tax brackets in 2017 as compared to 2018. Therefore, it is possible that deferring income into 2018 may benefit a larger number of individuals than otherwise expected. Moreover, if tax reform eliminates or limits current deductions starting in 2018, accelerating those deductions into 2017 may preserve a deduction that might otherwise be lost altogether.
Planning Alert: Due to the uncertainty of tax reform, we believe the best approach is to delay the implementation of tax-savings strategies as long as possible – but be prepared to act quickly near the end of 2017!
PROPOSED TAX REFORM LEGISLATION RELEASED NOVEMBER 2, 2017 – GENERAL OVERVIEW
As noted above, on November 2,2017, the House Ways and Means Committee released its initial proposed tax reform bill entitled “The Tax Cuts and Jobs Act of 2017” (the “Act”). As this proposed legislation works its way through Congress, new proposals will likely be added, and certain current proposals will be modified or even eliminated altogether. Moreover, it is still up in the air whether and when this promised tax reform legislation will be enacted. However, this initial bill provides us with the most detailed guidance to date regarding the types of tax changes Congress and President Trump will be debating. Caution; Over the upcoming weeks, there will likely be reports of proposed tax changes that we do not discuss below. The Act contains over 400 pages of detailed legislative proposals.
Unless stated otherwise, the proposals listed below would not be effective until 2018!
Lower Tax Rates; The Act would generally reduce the current seven individual tax-rate brackets to four (12%, 25%, 35%, and 39.6%). The lowest 12% rate would apply to the first $90,000 of taxable income for joint filers ($45,000 for singles), and the top 39.6% rate would apply to taxable income exceeding $1,000,000 for joint filers (exceeding $500,000 for singles). The tax rate on long-term capital gains (and presumably qualified dividends) would generally be consistent with current law.
Increased Standard Deduction and The Elimination of Personal And Dependency Exemptions; The Act would eliminate the personal and dependency exemptions altogether, and replace them with a larger standard deduction ($24,400 for joint filers; $18,300 for unmarried individuals with a qualifying child; and $12,200 for singles).
Targeted Family Tax Credits; The Act would increase the child credit to $1,600 (up from the current $1,000) per qualifying child, and create a new $300 credit for each individual and each dependent of that individual (other than a qualifying child).
Repeal of Certain Deductions And Credits; The Act would repeal the following deductions: State and local “income” taxes; Personal casualty losses; Alimony; Medical expenses; Moving expenses; and, several others.
Certain Deductions Would Be Retained; The Act would generally retain deductions for: Home mortgage interest (However, it would lower loan amounts and make other changes for loans after November 2, 2017); State and local “property “taxes (up to $10,000); and, Charitable contributions.
Education Tax Relief Provisions; The Act would repeal many of the tax breaks for education costs, including: Student loan interest deduction; Life-Time Learning Credit; Deduction (up to $4,000) for qualified tuition; and several others. However, the Act would retain and expand: the “American Opportunity Tax Credit,” and tax favored 529 College-Savings Plans.
Exclusions for Home-Sale Gains; Effective for sales or exchanges after 2017, the Act would make the following changes to the home-sale gain exclusion rules: 1) Require an individual to own and use a home as the individual’s principal residence for 5 out of the previous 8 years (instead of 2 out of the previous 5 years) to qualify for the up to $500,000 or $250,000 home-sale exclusion, 2) Allow the taxpayer to use the home-sale exclusion only once every five years (instead of once every two years as under current law), and 3) Reduce the exclusion for each dollar of an individual’s average AGI (average of the current and prior two years) in excess of $500,000 ($250,000 for single filers).
Elimination of The Alternative Minimum Tax And Estate Tax. The Act would repeal the “Alternative Minimum Tax” (AMT) after 2017. It would also repeal the Estate Tax for individuals dying after 2023. The Gift Tax would be retained.
TRADITIONAL YEAR-END TAX PLANNING TECHNIQUES
POSTPONING TAXABLE INCOME MAY SAVE TAXES
Deferring taxable income from 2017 to 2018 may reduce your income taxes if your effective income tax rate for 2018 will be lower than your effective income tax rate for 2017. For example, the deferral of income could cause your 2017 taxable income to fall below the thresholds for the highest 39.6% tax bracket (i.e., $470,700 for joint returns; $418,400 if single). In addition, if you have income subject to the 3.8% Net Investment Income Tax (3.8% NIIT) and the income deferral reduces your 2017 modified adjusted gross income (MAGI) below the thresholds for the 3.8% NIIT (i.e., $250,000 for joint returns; $200,000 if single), you may avoid this additional 3.8% tax on your investment income. Planning Alert; If tax reform is enacted and the tax rates for 2018 are reduced, deferring income beyond 2017 could generate even larger tax benefits than expected under the current tax rules.
If, after considering all factors, you believe that deferring taxable income into 2018 will save you taxes, consider the following strategies:
Deferring Self-Employment Income; If you are a self-employed individual using the cash method of accounting, consider delaying year-end billings to defer income until 2018.
Planning for Required Distributions from IRAs; Generally, once you reach age 70½, you are required to begin taking “Required Minimum Distributions” (RMDs) from your IRA or qualified retirement plan account. A 50% penalty applies to the excess of the “Required Minimum Distribution” (RMD) over the amount actually distributed. You might wish to consider the following ideas concerning RMDs which might save you money.
- IRA Owners Who Attain Age 70½ During 2017. If you reached age 70½ at any time during 2017, you must begin distributions from a traditional IRA account no later than April 1st of 2018. In addition, if you wait until 2018 to take your first payment, you will still be required to take your second RMD no later than December 31, 2018, which will cause you to “bunch” two payments into 2018. This “bunching” of the first two annual payments into one tax year (2018) could cause you to pay higher overall taxes if the bunching puts you in a higher tax bracket for 2018 than for 2017. However, if you expect your 2018 tax rate on the “bunched “payments to be lower than your tax rate on the first payment, if made in 2017, it could save you overall taxes to “bunch“the 2017 and 2018 RMDs into 2018.
- Individuals Making Charitable Contributions Who Are Age 70½ Or Older; If you have reached age 70½ and you are planning to make charitable contributions before the end of 2017, there is a special tax break that could apply to you. If you have reached age 70½, you may have your IRA trustee write a check, up to $100,000, from your IRA directly to a qualified charity and exclude the IRA contribution to the charity from income. The IRA trustee’s contribution to the charity also counts toward your “Required Minimum Distributions” (RMDs) for the year. This tax break effectively allows you to exclude all or a portion of your otherwise taxable RMDs from taxable income.
- Individuals Who Inherit IRAs And Qualified Retirement Plan Accounts May Defer Income By Delaying Distributions; If you are the beneficiary of an IRA or qualified plan account of someone who has died, you should consider the following options for deferring your RMDs (and thus postponing taxable income):
- Planning For IRA Distributions After The Owner’s Death; If you are the beneficiary of an IRA or qualified plan account of someone that has died in 2017, there are certain time-sensitive planning techniques you should consider without delay. For example, if the decedent named multiple individual beneficiaries or included an estate or charity as a beneficiary, we may be able to rearrange the IRA beneficiaries for maximum tax deferral. The rules for rearranging IRA beneficiaries after the owner dies are tricky, and acting before certain deadlines pass is critical. If the owner died in 2017, the best tax results can generally be achieved by making any necessary changes no later than December 31, 2017.
- Rollovers By Surviving Spouses; If your spouse passed away during 2017 and named you beneficiary of an IRA or qualified plan account, there are certain things you should consider if you want to maximize tax deferral. For example, if your spouse was over age 70½ and died during 2017, and you are over 59½, you should consider rolling the deceased spouse’s qualified plan or IRA amount into your name (as surviving spouse) on or before December 31, 2017. Planning Alert; If you (as surviving spouse) are not yet 59½, leaving the IRA or qualified plan account in the name of your deceased spouse may be the best option if you think that you will need to withdraw amounts from the retirement account before you reach age 59½. If your deceased spouse’s account is transferred into your name and you take a distribution before reaching age 59½, the distribution could be subject to a 10% early distribution penalty.
TAKING ADVANTAGE OF DEDUCTIONS
If new tax legislation is enacted and reduces individual tax rates after 2017 as proposed, individuals would likely be subject to higher tax rates in 2017 than for 2018. Thus, accelerating deductions into 2017 may generate an even greater tax benefit than expected. Planning Alert; The tax reform proposals currently working their way through Congress would, if enacted, eliminate or place new limits on deductions after 2017 (e.g., proposals to eliminate or restrict the deduction for state and local taxes and medical expenses). Therefore, depending on future legislation, paying for a deductible item in 2017, rather than waiting until 2018, could have the added benefit of preserving a deduction that might not otherwise be available in 2018. If you think that you would benefit from accelerating 2018 deductions into 2017, you should consider the following:
“Above-The-Line” Deductions Can Generate Multiple Tax Benefits; So-called “above-the-line” deductions reduce both your “adjusted gross income” (AGI) and your “modified adjusted gross income”(MAGI), while “itemized” deductions (i.e., below-the-line deductions) do not reduce either AGI or MAGI. Deductions that reduce your AGI (or MAGI) can generate multiple tax benefits by: 1) Reducing your taxable income and allowing you to be taxed in a lower tax bracket; 2) Potentially freeing up other deductions (and tax credits) that phaseout as your AGI (or MAGI) increases (e.g., itemized deductions, personal exemptions, IRA contributions, education credits, adoption credit, etc.); 3) Potentially reducing your MAGI below the income thresholds for the 3.8% Net Investment Income Tax (i.e., 3.8 % NIIT only applies if MAGI exceeds $250,000 if married filing jointly; $200,000 if single); or 4) Potentially reducing your household income to a level that allows you to qualify for a “refundable” Premium Tax Credit for health insurance purchased on a government Exchange.
If you think that you could benefit from accelerating “above-the-line “deductions into 2017, consider the following:
- Identifying “Above-The-Line” Deductions. “Above-the-line” deductions include deductions for IRA or Health Savings Account (HSA) contributions, health insurance premiums for self-employed individuals, qualified student loan interest, qualified moving expenses, qualifying alimony payments, and business expenses for a self-employed individual. Tax Tip; Unreimbursed “employee” business expenses are classified as “miscellaneous itemized deductions” and trigger two potential limitations: 1) In the aggregate, these deductions are allowed only to the extent they exceed 2% of your AGI, and 2) any excess over the 2% threshold is included in “itemized deductions” and is subject to the 3% of AGI subtraction.
- Accelerating “Above-The-Line” Deductions; As a cash method taxpayer, you can generally accelerate a 2018 deduction into 2017 by “paying” it in 2017. “Payment” typically occurs in 2017 if a check is delivered to the post office, if your electronic payment is debited to your account, or if an item is charged on a third-party credit card (e.g., Visa, MasterCard, Discover, American Express) in 2017. Caution; If you post-date the check to 2018 or if your check is rejected, no payment has been made in 2017.
- Accelerating “Itemized” Deductions Into 2017; As mentioned above, although “itemized” deductions (i.e., below-the-line deductions) do not reduce your AGI or MAGI, they still may provide valuable tax savings. Many of your itemized deductions are reduced in the aggregate once your AGI exceeds certain thresholds (e.g., for 2017 – $313,800 for joint returns; $261,500 if single). Itemized deductions generally include charitable contributions, state and local income taxes (or, alternatively state and local sales taxes), property taxes, medical expenses, unreimbursed employee travel expenses, home mortgage interest, and gambling losses (to the extent of gambling income). However, if your itemized deductions fail to exceed your Standard Deduction in most years, you are not receiving maximum benefit for your itemized deductions. You could possibly reduce your taxes over the long term by bunching the payment of your itemized deductions in alternate tax years. This may produce tax savings by allowing you to itemize deductions in the years when your expenses are bunched, and use the Standard Deduction in other years. Tax Tip; The easiest deductions to shift from 2018 to 2017 are charitable contributions, state and local taxes, and your January 2018 home mortgage interest payment. For 2017, the standard deduction is $12,700 on a joint return and $6,350 for single individuals. If you are blind or age 65, you get an additional standard deduction of $1,250 if you’re married ($1,550 if single).
- Pending Tax Reform Proposals Could Enhance the Benefits of Accelerating Itemized Deductions Into 2017! As previously discussed, current tax reform proposals call for a significant increase in the “Standard Deduction. ”If this larger standard deduction is enacted and is effective in 2018, individuals who would itemize deductions for 2018 under current law, instead, may use the standard deduction for 2018. This would result in a loss of any benefit for items qualifying as an itemized deduction under current law that are paid in 2018. Therefore, if the increased standard deduction is enacted and is effective for 2018, these individuals could benefit by paying expenses qualifying as an itemized deduction before the end of 2017. Moreover, since the tax reform proposals would, if enacted, eliminate or place new limits on current itemized deductions (e.g., eliminate or restrict the deduction for state and local taxes and medical expenses), accelerating those deductions into 2017 could also have the benefit of preserving a deduction that might otherwise be lost in 2018.
Pay Careful Attention to The Payment Of Your State And Local Income Taxes; If you anticipate deducting your state and local income taxes, consider paying them (fourth quarter estimate and balance due for 2017) and any property taxes for 2017 prior to January 1, 2018 if your tax rate for 2017 is higher than or the same as your projected 2018 tax rate. This will provide a deduction for 2017 (a year early) and possibly against income taxed at a higher rate. Planning Alert! Current tax reform proposals include the possibility of eliminating or limiting the itemized deduction for state and local taxes. Moreover, under current rules, state and local income and property taxes are not deductible for AMT purposes. Therefore, if you are subject to AMT for 2017, you will generally receive no benefit for these deductions.
Pending Tax Proposals That Could Impact Planning for AMT; As mentioned above, certain itemized deductions are not allowed in computing your “Alternative Minimum Tax” (AMT), such as state and local taxes (including state income taxes) and unreimbursed employee business expenses. Congress is currently considering tax reform proposals that, if enacted, could eliminate the “Alternative Minimum Tax” (AMT) after 2017. Consequently, if the repeal of AMT is enacted and becomes effective in 2018, and the current deductions that are not allowed to reduce AMT in 2017 remain deductible for regular tax purposes in 2018, it could be to your advantage to delay payment of these items until 2018.
TAX PLANNING FOR INVESTMENT INCOME (INCLUDING CAPITAL GAINS AND THE 3.8% NIIT)
Planning With The 3.8% Net Investment Income Tax (3.8% NIIT); The Affordable Care Act (ACA) provides for a 3.8% Net Investment Income Tax (3.8% NIIT) on the net investment income of higher-income individuals. This tax applies to individuals with modified adjusted gross income (MAGI) exceeding the following “thresholds”: $250,000 for married filing jointly; $200,000 if single; and $125,000 if married filing separately. The 3.8% NIIT is imposed upon the lesser of an individual’s: 1) Modified adjusted gross income (MAGI) in excess of the threshold, or 2) Net investment income. Trusts and estates are also subject to the 3.8% NIIT on the lesser of: 1) The adjusted gross income of the trust or estate in excess of $12,500 (for 2017), or 2) The undistributed net investment income of the trust or estate.
The 3.8% NIIT not only applies to traditional types of investment income (i.e., interest, dividends, annuities, royalties, and capital gains), it also applies to “business” income that is taxed to a “passive” owner (as discussed in more detail below) unless the “passive” income is subject to S/E taxes. If you believe that the 3.8% NIIT may apply to you, consider the following planning techniques:
- Roth IRAs (Including Roth IRA Conversions); Tax-free distributions from a Roth IRA are exempt from the 3.8% NIIT, and do not increase your MAGI (and, thus will not increase your exposure to the 3.8% tax). Therefore, these tax-favored features should be factored into any analysis of whether you should contribute to a Roth IRA. However, if you are considering converting a traditional IRA into a Roth, the income triggered in the year of conversion would increase your MAGI and, therefore, may increase your exposure to the 3.8% NIIT on your net investment income (e.g., dividends, interest, capital gains). Planning Alert! If you want a Roth conversion to be effective for 2017, you must transfer the amount from the regular IRA to the Roth IRA no later than December 31, 2017 (you do not have until the due date of your 2017 tax return).
- “Passive” Income; “Net Investment Income “for purposes of the 3.8% NIIT generally includes net income from a business activity if you are a “passive “owner (unless the income constitutes self-employment income that is subject to the 2.9% Medicare tax). You will generally be deemed a “passive” owner if you do not “materially participate “in the business as determined under the traditional “passive activity loss”
- Traditional Year-End Planning with Capital Gains And Losses; Generally, net capital gains (both short-term and long-term) are potentially subject to the 3.8% NIIT. This could result in an individual who is otherwise taxed at 39.6% on ordinary income paying tax on his or her net long-term capital gains at a 8% rate (i.e., the maximum capital gains tax rate of 20% plus the 3.8% NIIT). In addition, this individual’s net short-term capital gains could be taxed as high as 43.4% (i.e., 39.6% plus 3.8%). Consequently, traditional planning strategies involving the timing of your year-end sales of stocks, bonds, or other securities are more important than ever. The following are time-tested, year-end tax planning ideas for sales of capital assets. Planning Alert! Always consider the economics of a sale or exchange first!
- Planning with Zero Percent Tax Rate For Capital Gains And Dividends; Long-term capital gains and qualified dividends that would be taxed (if ordinary income) in the 15% or lower ordinary income tax bracket, are taxed at a zero percent rate. For 2017, taxable income up to $75,900 for joint returns ($37,950 if single) is taxed at the 15% rate, or below. Tax Tip. Taxpayers who have historically been in higher tax brackets but now find themselves between jobs, recently retired, or expecting to report higher-than-normal business deductions in 2017, may temporarily have income low enough to take advantage of the zero percent rate for 2017.
- Lower-Income Retirees; The zero percent rate for long-term capital gains and qualified dividends is particularly important to lower-income retirees who rely largely on investment portfolios that generate dividends and long-term capital gains. Furthermore, gifts of appreciated securities to lower-income individuals who then sell the securities could reduce the tax on all or part of the gain from as high as 23.8% to as low as zero percent. Caution! If the lower-income individual is subject to the so-called kiddie tax, this planning technique will generally not work.
- Timing Your Capital Gains and Losses; If the value of some of your investments is less than your cost, it may be a good time to harvest some capital losses. For example, if you have already recognized capital gains in 2017, you should consider selling securities prior to January 1, 2018 that would trigger a capital loss. These losses will be deductible on your 2017 return to the extent of your recognized capital gains, plus $3,000. Tax Tip. These losses may have the added benefit of reducing your income to a level that will qualify you for other tax breaks, such as the: $2,500 American Opportunity Tax Credit, $1,000 Child Credit, $13,570 Adoption Credit, etc. Planning Alert! If, within 30 days before or after the sale of loss securities, you acquire the same securities, the loss will not be allowed currently because of the “wash sale “rules (although the disallowed loss will increase the basis of the acquired stock). Tax Tip. If you are afraid of missing an upswing in the market during this 60-day period, consider buying shares of a different company in the same sector. Also, there is no wash sale rule for gains.
AND FINALLY IN CONCLUSION……
Looks like we have a tax rollercoaster ahead but after all that, I again just want to thank you all for the trust you place in us each and every day! It is a pleasure to be associated with you not only on a professional basis but considered as friends. Your goals, your triumphs and even your bumps are all personal to us every day and we again thank you for the honor.
Please contact us if you are interested in a tax topic that we did not discuss. Tax law is constantly changing due to new legislation, cases, regulations, and IRS rulings. Our firm closely monitors these changes. In addition, please call us before implementing any planning ideas discussed in this letter, or if you need additional information. Please check back at: www.piasecki.cpa for updated information as it becomes available.
Best Wishes for a Safe and Peaceful Holiday to All!!
Disclaimer: Any tax advice contained in the body of this material was not intended or written to be used, and cannot be used, by the recipient for the purpose of promoting, marketing, or recommending to another party any transaction or matter addressed herein. The preceding information is intended as a general discussion of the subject addressed and is not intended as a formal tax opinion. The recipient should not rely on any information contained herein without performing his or her own research verifying the conclusions reached. The conclusions reached should not be relied upon without an independent, professional analysis of the facts and law applicable to the situation.