December 2006, A Time for Tax Planning
As the end of 2006 nears, tax planning is the last thing on the majority of our minds. However, once the year ends a large amount of tax planning opportunities will be lost forever, as far as the 2006 tax year is concerned that is. With the many changes taking place with the tax law in recent months, it is important to work closely with your tax advisor to take advantage of these changes.
The following are some year end planning ideas to take into consideration and discuss with a tax professional:
If you have an interest in a partnership or S corporation and are expecting pass-through losses, you may want to consider taking the necessary steps to increase your basis in these entities to prevent the losses from being disallowed due to basis limitations.
If you own stock, consider selling appreciated or depreciated stock to trigger gains or losses to maximize the tax benefit by offsetting gains with losses or vice versa.
Consider the possibility of utilizing a pension plan to generate a business deduction. Certain plans have to be in place before year end for a deduction to be allowed in that particular tax year.
If you have not met the safe harbor requirements for federal or state withholding, you may want to adjust withholding on your final paychecks of 2006 or on your year end bonus.
If youre a business owner, consider purchasing equipment before year end which qualifies for the code section 179 deduction.
Qualified energy saving improvements to your home may generate a tax credit if made before year end.
Depending on your 2006 tax situation and your expected 2007 situation, you may want to ask your employer to defer your year end bonus until 2007.
These are just a few examples of the many planning opportunities available before 2006 comes to an end. Be sure to consult with your tax advisor and act on the ones which may be beneficial to you before its too late.
Certified Public Accountant in Las Vegas, NV specializing in individual and corporate taxation.
http://www.southernnevadacpa.com
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