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Waiting, Waiting and Waiting on Congress!

November 28, 2010

This last Tuesday I was in school for my continuing ed credits that I am required to do yearly. This class was always one of the best I had taken in the past called “Year End Tax Planning.” Sadly this year it was almost a waste of time and money because so much of year-end tax planning is based on current (2010 tax year) and future (2011 tax year) tax laws…which have yet to be decided upon. Congress decided to not make any decisions (legislative decisions) until after Thanksgiving.

It is pretty much agreed upon that the tax rates will be higher in 2011. So a few questions can be answered simply by giving opinions. Assuming the  tax rates are higher, then,  do we defer income in 2010? My opinion is no (not if the tax rates are going to be higher). Assuming the rates are higher in 2011, do we take write-offs now rather than defer? My opinion is yes depending on the type of write-offs. See how frustrating this can be, even for the tax professionals. Tax Forms

Here is a list of expired provisions (and we’re still waiting on what ifs…)

  • Sales tax itemized deduction
  • Real property tax deduction
  • Disaster loss deduction
  • Educator expense deduction
  • Tuition & fees deduction
  • IRA distributions to charity
  • Energy efficient home credit (for the builder)

Other pending questions:

  • 2011 Tax Brackets: Goodbye 10% bracket? and Welcome back 39.6% bracket?
  • Defer capital gains: Should be a year to take capital gains if the increase goes thru?
  • AMT Exemption: What will the patch be and will it come in December?
  • Maximize 2010 deductions: Do you prepay some items or pay AMT?
  • Estate issues in 2010: Dying in 2010 has pros and cons…?

So there is a lot going on and the 2010 tax year(done in 2011) proves to be a challenging year for us all. The exciting part of tax work for me is the puzzle. Once all the pieces line up…you don’t even see the pieces when it is done. How poetic does that sound! At GAI (www.gunwel.com) we enjoy our work and look forward to working with you. Give us a call at 212-979-6830 or stop by for a visit as we can begin your tax planning today. See you soon.

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