Greg Lewis, CPA/PRS, CFP gave this talk about Tax Planning to the medical consultancy group AdvancedPlanning4Docs.com in Orange County, California.

1. Advanced
Planning Tax
Presentation
Presented by: Greg Lewis, Shareholder
Date: December 5, 2015

2. Timing Income & Deductions to your Tax Advantage
 The Alternative Minimum Tax (AMT)
 Home-Related Breaks
 Charitable Donations
 Limit on Itemized Deductions
 Additional 0.9% Medicare tax

3. THE ALTERNATIVE MINIMUM TAX (AMT)
 Separate tax system that limits some deductions
& disallows others
 State & local income tax deductions
 Property tax deductions
 Misc. itemized deductions subject to the 2% of AGI
 Investment advisory fees
 Unreimbursed employee business expenses

4. HOME-RELATED BREAKS
 Property tax deductions
 Before paying your bill early, review your AMT
situation
 Mortgage interest deduction
 Deduct interest on up to a combined total of $1M or
mortgage debt incurred to purchase, build, or
improve your principal and 2nd residence
 Home equity debt interest deduction
 Can be used for any purpose (debt limit of $100K)
 Consider using a home equity loan or line of credit
to pay off credit cards or auto loans
 Interest isn’t deductible and rates may be higher

5. CHARITABLE DONATIONS
 Qualified charities are generally fully deductible
 Regular tax
 AMT purposes
 Appreciated publicly traded stock you’ve held more
than 1 year
 Deduct current fair market value
 Avoid capital gains tax you’d pay if you sold property
 Subject to tighter deduction limits
 Excess contributions can be carried forward for up to 5
years

6. LIMIT ON ITEMIZED DEDUCTIONS
 If your AGI exceeds the applicable threshold,
certain deductions are reduced by 3% of the AGI
amount that exceeds the threshold
 Not to exceed 80% of allowable deductions
 Thresholds for 2015:
 $258,250 (single)
 $284,050 (head of household)
 $309,900 (married filed jointly)
 $154,950 (married filing separately)

7. ADDITIONAL 0.9% MEDICARE TAX
 Applies to FICA wages and net self-employment
income exceeding $200K/year
 $250K/year for joint filers
 $125K/year for separate filers

8. Family & Education Tax Breaks
Make Raising Kids Less Costly
 IRAs for Teens
 The “Kiddie Tax”
 529 Plans

9. IRAs FOR KIDS
 Many years to let accounts grow tax-deferred or tax-free
 2015 contribution limit is
the lesser of $5,500 or
100% of earned income
 Traditional IRA contribution
typically are deductible
 Roth IRA contributions are not deductible, but qualified
distributions will be tax-free

10. 529 COLLEGE SAVINGS PLANS
 Prepaid tuition program to secure current tuition rates or a
tax-disadvantaged savings plan to fund college expenses
 Contributions are not deductible
for federal purposes, but plan
assets can grow tax deferred
 Some states offer tax incentives in
the form of deductions or credits
 Distributions used to pay qualified expenses are income-tax
free for federal and state purposes
 Tuition, mandatory fees, books, supplies, room and board

11. Tax Planning for your Investments:
What you need to know
 Capital Gains & Tax Timing
 Loss Carryovers
 The 3.8% NIIT

12. CAPITAL GAINS TAX & TIMING
 Time is the key to long-term investment success
 Timing can have a dramatic impact on the tax
consequences of investment activities
 Long-term capital gains rate might be as much as
20 percentage points lower than your ordinary
income-rate

13. CAPITAL GAINS TAX & TIMING CONT.
 Use unrealized losses to absorb gains
 To determine capital gains tax liability, realized capital
gains are netted against any realized capitalized losses
 See if a loved one qualifies for the 0% rate
 Applies to long-term gain that would be taxed at 10% or
15% based on taxpayer’s ordinary income rate
 Consider transferring appreciated assets to adult children
in one of these tax brackets
 Sell the assets at 0% rate

14. LOSS CARRYOVERS
 Deduct $3K ($1500 for married taxpayers filing
separately) of the net losses per year against
dividends or ordinary income (wages, self-
employment, business income and interest) if net
losses exceeds net gains
 Carry forward excess losses indefinitely

15. THE 3.8% NIIT
 Taxpayers with modified adjusted gross income
(MAGI) over $200K/year may owe the net
investment income tax
 $250K/year for joint filers and $125K/year for
married filing separately
 NIIT = 3.8% of the lesser of your net investment
income or the amount by which your MAGI
exceeds the applicable threshold

16. WHATS THE MAXIMUM
CAPITAL GAINS TAX RATE?
Assets held 2015
12 months or less (short term) Taxpayer's ordinary income tax rate
More than 12 months (long term)
39.6% ordinary-income tax bracket 20%
25%, 28%, 33%, or 35% ordinary-income tax bracket 15%
10% or 15% ordinary-income tax bracket 0%
Some key exceptions
Long-term gain on collectibles, sch as artwork and antiques 28%
Long-term gain attributable to certain recapture of prior
depreciation on real property 25%

17. Implement a Robust Tax Plan
 Projecting Income
 Depreciation
 NOLs

18. PROJECTING INCOME
 Deferring income to next year
 Cash method of accounting: defer billing for products
or services
 Accrual method: delay shipping products or delivering
services
 Accelerate deductible expenses into the current
year
 Cash-basis taxpayer may make a state estimated tax
payment by Dec. 31 (deduct this year rather than the
next)

19. DEPRECIATION
 Section 179 Expensing Election
 Deduct cost of purchasing eligible new or used assets
(equipment, furniture, off-the-shelf computer
software) rather than depreciate over a number of
years
 Expensing limit for 2015 is $25K

20. DEPRECIATION CONT.
 50% bonus depreciation
 Additional 1st year depreciation allowance expired
12/31/14, with a few exceptions
 Congress may revive bonus depreciation

21. DEPRECIATION CONT.
 Cost Segregation Study
 Recently purchased or built a building or are
remodeling existing space
 Identifies property components that can be
depreciated much faster, increasing your current
deductions

22. NET OPERATING LOSS (NOLs)
 Operating expenses and other deductions for the
year exceed revenues
 NOL may be carried back 2 years to generate a
refund
 Any loss not absorbed is carried forward up to 20
years to offset income

23. Questions