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Post election tax planning

Tax reform appears to be a major priority in the new Congress and with the newly elected president. Although this isn’t the first time tax reform has been a high priority, the scope of the shakeup in that other Washington indicates that it may get more action next year than in any of the 30 years since the last tax reform act.

With the electoral victory of Donald Trump and the Republicans, what tax planning moves might make sense based upon their campaign promises?

Tax rate cuts: Promises to cut tax rates across the board would indicate that deferral of income might be a smart move. If you have any flexibility as to when income can be reported, 2017 may be a better year than 2016. Items such as Roth IRA conversions, first year RMD distributions, and bonuses may be taxed more lightly if they can be deferred to 2017.

Repeal of the Affordable Care Act (Obamacare). One of the provisions most likely to be repealed is the 3.8% surtax on investment income. Therefore, sales of property that might trigger this provision should be delayed until 2017. If such a sale can’t be delayed, explore the possibility of restructuring it as an installment sale.

Base broadening. Promises to reduce the value of itemized deductions, or raise the standard deduction, make the value of itemized deductions such as charitable contributions, interest and taxes higher in 2016 than 2017. You should consider the timing of these deductions to determine whether any can be accelerated or bunched into 2016.