LOOKING FOR LEGAL WAYS
TO REDUCE TAX?
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The Ultimate Year End Tip Guide and the Search for the Great Shelter
Coming up on the end of the year, year end planning is kind of a ritual for me. I take my first pass in early November and will do it again no later than December. It is pretty boring. I thought it would be worthwhile to do a survey of a variety of year end tips articles. What is going on here is something like Ahab’s hunt for the great white whale. I am looking for something to help out HENRY. HENRY stands for High Earnings Not Rich Yet. I wrote about the quest in 2019. I found nothing much for HENRY then, and this year’s batch of advice articles really does not offer much. The articles do not all say exactly the same thing, but there is a lot of commonality. Due to the sophisticated nature of the readership of TOTTB, I will just allude to the tips, not explain them in detail, because I am going someplace else with this. There is nothing dramatic for HENRY coming from conventional advisers, which accounts for HENRY’s vulnerability to sketchy tax shelters. I will share a bit about what I have seen in that department and reflect a bit.
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CURRENT EDITION
An Analysis of the OBBBA’s Trump Accounts (Part 2)
In part one of this series, I went over the basics of the new retirement accounts for minors, Trump Accounts, which were created as part of the One Big Beautiful Bill Act (OBBBA). Trump Accounts allow the Government, Charitable Organizations, Parents, and others to contribute to a child’s savings, usually on an after-tax basis. These accounts then transition to a traditional individual retirement account (IRA) when the child turns 18. Although the contribution limits act like non-deductible traditional IRA contributions and have a contribution limit of only $5,000 per year, they do not have the same earned income requirements that traditional IRA contributions have. This means that children are able to accumulate savings even without earned income. This article presents several scenarios to examine how Trump Accounts may play into an overall savings strategy for children.
Another Tax-Smart Way to Save for Retirement
Most clients are familiar with the well-known accounts to save for retirement, such as the 401(k) and IRA. Some clients might be able to supplement those with a lesser-known vehicle as well. A life insurance retirement plan (LIRP) is a type of permanent life policy with a cash value basically funded by overpaying premiums. The money can eventually be taken as a tax-free loan against the policy for anything from medical expenses and long-term care to supplemental retirement income to, for the wealthy, the payment of taxes on large estates.
Taxes & Taxidermy: Rampaging Through The Tax Code On The Back Of A Stuffed Rhinoceros
Is the taxidermy fee for a stuffed bear deductible? If so, should I depreciate it? What would the basis and class life be for depreciation? Those are real questions asked in a group chat with some colleagues. Of course my answer was “It depends.” And, like all good tax professionals, I proceeded to ask a series of follow-up questions. And, like a good writer, that got me to thinking about all of the tax-related case law surrounding taxidermy and what it can teach us—it’s more than one might think.
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Think Outside the Tax Box provides tax reduction strategies along with practical
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