December 31, 2011 is rapidly approaching and we would like to bring to your attention some 2011 year end tax items that you may want to review. The following are some important items to consider

Personal Income Taxes:

1. Investment Loss Positions
   Review and consider selling off Investment Losses that would reduce taxes and Investment Gains such as "commodities", "stocks" or other "investment properties".
   
   
2. Pay Off Business Expenses and Pay State and Local City 4^th Quarter 2011 Estimated Taxes by December 31, 2011
   However, if you are subject to the alternative minimum tax (see #3), which increases your actual 2011 income taxes you may want to defer the expenses to next year 2012.
   
   
3. Alternative Minimum Tax
   The following items may cause alternative minimum tax:
   • Received stock options
   • Large net capital gains
   • Significant Private Muni Bond income
   • Large investment expenses, real estate taxes, business expenses or state and local income tax payment
   • Paid alternative minimum tax in the last three years

You may need to defer expenses to 2012 and increase income this year.


4. Maximize your Retirement Account (Pension) Contributions
   Those who participate in a 401K plan can contribute up to $16,500, in 2011 ($22,000 if 50 or older by 12/31/11)
   
   
5. Maximize Deductions
   Consider donating your car and receiving a deduction for the charities selling price of the donated vehicle. Be sure to obtain form 1098C, which must be attached to your return.
   
   
6. New Qualified Plug-In Electric Drive vehicles may be eligible for a federal tax credit. Certain restrictions apply.
   
   
7. Residential energy efficient property tax credit is 30% of the cost of the eligible solar equipment.
   
   
8. Gifting Appreciated Stock to Children
   It may be advantageous to transfer appreciated stock of up to $13,000 ($26,000 per couple) fair market value (held over one year) to any child age 18 or over, 24 if a full time student and have them sell the stock in order to save income taxes on the gains. The rate on long-term capital gains for those in the lowest tax bracket is substantially lower than their parent's rate.
   
   
9. Homeowners with debt discharges of their primary homes can still exclude up to $2 Million of relief. This break will lapse on 12/31/12.

Business Income Taxes

1. Additional Write Off of Up to $500,000 1. of new equipment and Other Fixed Assets. Certain SUV's qualify, however the deduction is reduced to $25,000, plus ½ the balance is eligible for bonus depreciation.
   
   
2. Enhanced Defined Benefit Plans
   A Fully Insured Defined Benefit Plan will allow business owners tax deductible pension contributions well above those limits you are familiar with. The use of guaranteed annuities and/or whole life insurance products may generate huge contributions of over $200,000. Employee costs can also be designed at a minimum. Consider opening new plans by December 31, 2011. If interested, please contact us for details.