What is your Plan for Year End Tax Planning?

Here we are in mid-November and year end is approaching quickly. Still waiting for your CPA to pull a rabbit out of his hat for you. He won’t!

Waiting for a tax miracle to fall out of the sky? It won’t happen because the Almighty is focused on healing the sick and feeding the poor instead of your year end tax planning. Shame!

You are going to look elsewhere for your year end tax planning miracle.

Here are a few things that you might consider:

1. Family Investment LLC – Create a new investment company. Capitalize it with cash and or marketable securities. Contribute a 99 percent non voting LLC interest to a Donor Advised Fund that you create or your favorite charity (Army Powerlifting). Retain a managing member interest. This retention of control will allow you to legally retain control over the LLC’s assets. You can legally retain a management fee from the LLC even though you gave most of it away to charity. A tax deduction up to 50 percent of your AGI. Tax-free income on the pro rata income attributable to the charity. As managing member you determine when to make cash contributions to the charity. Asset protection from creditors. Oh, I forgot to tell you that you can make an arms-length loan to yourself as well. 

2. Captive Insurance Cell – So you have lots of discretionary income and don’t like qualified retirement plans. Create a captive cell which insured your business’ under-insured and uninsured risks. Make the IRC Sec 953(d) election which treats up $1.2 of premium into the captive as exempt income to the captive. Only the captive’s investment income is taxable. The operating company takes a full deduction. The tax characteristics are better than those of the qualified plan. Virtually tax deferred investment growth and long term capital gain treatment upon liquidation. Qualified dividend treatment on dividend distributions. No early withdrawal penalties. This may also provide good opportunities as a vehicle for non-qualified deferred compensation planning for key executives on a pre-tax basis. 

3. Discriminatory Defined Benefit Plan – Create a new DB Plan and eliminate your employees from participation by unionizing them. If that sounds like asking you to join the communist party, i have a nice union for you. This allows you to legally to exclude your employees from participation. Get the documents signed by 12/31/13.

4. Obamacare Rescue Plan – Now that you have a new DB Plan you need to come up with the money to fund it. Drop your group health coverage for your employees effective 1/1/2014. Have your employees pick up individual coverage on the healthcare exchange and enjoy the benefit of tax subsidies. Create a Medical Expense Reimbursement Plan at the business level for employees. Use the substantial savings to fund your DB Plan. You have until the filing of the return plus extensions to fund the Plan. As a result you have an additional 8-10 months to come up with the funds to make your 2013 contribution. 

I do know squat so if you also need how to add 100-150 lbs to your full squat or deadlift, I am qualified in that area as well. 

Feel free to call me up (for free) to discuss your situation and determine if their is some salvation (at least tax-wise) for you this year. 

Don’t forget to count your blessings each and every day!








About gerrynowotny

I am a tax and estate planning attorney with a JD and LL.M in estate planning from the Univesity of Miami School of Law. I have worked in the life insurance industry for twenty three years and the last eleven in private placement life insurance.
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