November/December 2015 Tax Impact

As 2015 winds down, there are certain tax planning ideas that taxpayers might want to check out, such as deferring income and accelerating deductions. This article describes these and other strategies, including harvesting investment losses, avoiding estimated tax penalties, donating to charity and being mindful of deduction limitations. A sidebar offers some tips on year end tax strategies for business owners.

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Perhaps the most effective estate-planning strategies involve the use of irrevocable trusts. If a marriage is strong, a spousal lifetime access trust (SLAT) allows the husband or wife to obtain the benefits of an irrevocable trust while creating a financial backup plan. This article notes that a SLAT is simply an irrevocable trust — which may be an irrevocable life insurance trust (ILIT) — that authorizes the trustee to make distributions to one’s spouse if a need arises. Like other irrevocable trusts, a SLAT can be designed to benefit children, grandchildren or future generations.

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For 2015 and after, employers retaining at least a certain number of employees (generally 50 full-time employees or a combination of full-time and part-time employees) will be subject to the employer shared-responsibility provisions. Every employer will be affected in the sense that they’ll have to check annually to see whether their business and its health care benefits (or lack thereof) trigger consequences under the law. As this article explains, the key determinants are whether employers employ a “large” number of employees, and if they do, whether they’ll offer at least a “minimum value” of “affordable” health care coverage to full-time staff.

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This issue’s “Tax Tips” provides information on passive foreign investment companies, how to deal with concentrated stock positions, and a Ninth U.S. Circuit Court of Appeals ruling that the mortgage interest deduction limit applies on a per-taxpayer basis, reversing a 2012 Tax Court decision.

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