Word: taxingly
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Dates: during 1990-1999
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Consider charitable donations of assets that have greatly appreciated. You can take a full deduction for the market value of the asset, yet skip the capital-gains tax. If you aren't sure which charity you want to favor and you're giving cash, consider establishing a gift fund to reduce your estate. You can choose where to send the money next year. A number of mutual-fund companies have such funds, though they give you less freedom in choosing where to ultimately direct the money...
...forget that as the lifetime exclusion rises in coming years, you benefit even if you used it up at a lower level. You can shelter from estate tax the difference between the old limit that you've exhausted and the new limit. You can also donate, tax-free, virtually unlimited amounts for certain medical and education expenses beyond the normal gift limitations...
...always, you'll want to defer income where possible and accelerate deductions. That might mean taking a bonus in January rather than December, if you have a choice, or paying your last estimated quarterly state income tax in December instead of January. Other ways to pull deductions forward: prepay health-insurance premiums, student-loan and mortgage interest and some college tuition...
...expect to be in a much higher tax bracket next year, however, you should do the opposite. Ditto if you'll get hit with the alternative minimum tax in 1999. Before making any move, in fact, you should consult a tax pro to figure out if the amt applies. Once only the superrich were vulnerable, but now many upper-middle-class taxpayers get hit. Warning signs include a very large mortgage, stock options that you've exercised or large business-related deductions...
Selling for just tax reasons doesn't make sense if your losers are still worth holding. If you do sell and generate the tax loss, you can't hold onto that loss if you repurchase the stock within 30 days. So buy another stock in the same industry. "This is especially simple in the mutual-fund world," observes Tom Ochsenschlager, tax partner at Grant Thornton. Sell a losing fund, realize the loss for tax reasons, and immediately buy another fund just like...