Tax Planning

Tax Tip: Contemplate a multi-pronged strategy to tax planning

Consider a multi-pronged approach to individual tax planning.

Crop losses

Privately held securities with accrued tax losses in 2021 can be sold in 2021 and the losses can be used to offset other income from capital gains. Section 1091 of code prohibits such a tax loss if the taxpayer buys back the stock or gives an option to buy within 30 days of the sale.

View retirement plans

Retirement, with-profits, Section 401 (K) plans and other tax-privileged retirement plans are required to pay the required minimum annual dividends or RMDs as required. Failure to distribute the RMD will result in penalties for the individual participant or beneficiary. The Covid-19 relief does not apply in 2021.

Consider giving away

For 2021, the annual exclusion of $ 15,000 for gifts paid to each gift recipient will be available to each donor, and that amount will increase to $ 16,000 per gift recipient on January 1, 2022. Some gifts / payments may not count towards exclusion. For example, grandparents can pay tuition fees for their grandchildren, but no room and board, without this affecting the annual exclusion.

This column does not necessarily represent the opinion of the Bureau of National Affairs, Inc. or its owners.

Information about the author

Philip S. Olsen is a tax attorney with the Boston law firm Davis Malm, where he focuses on state and local tax advice and litigation. He has more than 25 years of experience in litigation and the settlement of important tax disputes before courts and boards of directors.

Richard J. Hindlian is a tax and corporate attorney with the Boston law firm Davis Malm, where his primary focus is tax disputes, international and domestic tax planning, and employee benefit plans. Before starting his legal career, Richard worked as a tax advisor at Ernst & Young.

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