Clients close to breaching the threshold this year might accelerate dental work or elective surgery, or purchase eyeglasses or contact lenses. And, LaBrecque says, remind clients that expenses charged on a credit card in 2012 are deductible in 2012.
Business owners can write-off half the cost of new equipment they purchase with 50% bonus depreciation. This generous deduction can be used to create a tax loss for the year, Christian points out. "Then carry back the loss to prior years to get refunds of taxes that the client paid. We are doing some of that," he says.
Bonus depreciation is not available in 2013.
Patch Worn Out
As of this writing, the 2012 exemption from alternative minimum tax is $45,000 for joint filers and $33,750 for singles. Forecasts call for a seven-and-a-half fold increase in the number of taxpayers subject to the tax this year.
But that's been the story for several years running, hasn't it? Congress has perennially bandaged the problem with a higher, but temporary, exemption, usually at the 11th hour. We're not there yet.
"If you can't avoid AMT, you may want to embrace it and take more ordinary income," Christian says. "The top marginal rate under AMT is currently only 28%," which is lower than the top two ordinary brackets. He says he's helping AMT clients decide whether to accelerate into 2012 the exercise of their stock options-among other things-to take advantage of AMT's 28% rate.
The "How Many Million Dollars?" Question
Gifting opportunities presently abound. But the clock is ticking with a vengeance.
The end of EGTRRA would slash the per-person gift tax exemption from $5.12 million to a modest $1 million, while simultaneously raising the tax on transfers above the exemption to 55%, up from the current 35%.
Clients shouldn't gift assets they are likely to need later, of course-call it means testing for the high-net-worth crowd. "We have a real estate investor with properties they weren't counting on for living expenses," says John Przybylski, director of financial planning at Boston-based Federal Street Advisors. "Those are the assets they are giving to their children."
Many of his clients who can afford to gift are utilizing grantor retained annuity trusts and other vehicles that benefit from valuation discounts. These planning tools are not slated to end in 2013, but they are frequently in Washington's crosshairs.
Clients contemplating making gifts in 2012 should get moving soon because trusts and estates attorneys are already busy and may not be available at the last moment to help dillydalliers.