Friday, October 29, 2010
Some tax professionals offered suggestions for dealing with this time of uncertainty in the tax world:
Investments. You may want to recognize your gains now and take the 15% rate. This is not necessarily always a good idea though, and the type of asset should play a role in your decision.
Gifts. You can gift a trust to a spouse at this year’s gift tax rate and not have to elect to treat it as a marital or nonmarital trust until next October. Giving gifts to grandchildren is also a good idea because there is no GST tax this year.
Estate Taxes. People have put off updating their estate plans because of the tax uncertainty, but meeting with an estate planning attorney is vital. Attorneys will know what planning is best for your situation, and they’ll know your state’s estate tax laws.
Roth Conversions. Converting your IRA into a Roth IRA and paying 2010 taxes or spreading them out in 2011 and 2012 may be a valuable move.
Business Owners. Due to the Small Business Jobs Act, those who make big outlays for business property this year can realize tax savings.
If this isn’t enough for you to worry about, Congress may decide to enact a retroactive tax law. While most professionals don’t anticipate Congress to do so, it is a theoretical possibility. In fact, Congress has done it before in 1987, and the Supreme Court upheld the law seven years later.
See Jan M. Rosen, The Watchword on Taxes This Year is Flexibility, N.Y. Times, Oct. 20, 2010.
Special thanks to Jim Hillhouse (WealthCounsel) for bringing this to my attention.