Dear Friends & Colleagues,

My friend and colleague Robert Keebler, CPA/PFS warns that when the clock strikes midnight on December 31st, those with big stock holdings may be out of luck!

When selling or gifting stock, we have always been able to pick and choose those with the highest basis, to reduce potential capital gains taxes (or realize losses).

Things are about to change.

The Senate Tax Reform Bill includes a new “FIFO” rule, effective January 1.  When a client sells stock in a company, the earliest purchased shares will have to be sold first (or gifted those which often have the lowest basis!).

For those with large stock holdings in a company that they acquired over time (including through automated stock purchase, dividend investment, or stock option plans), there is a limited window of opportunity before year-end to take advantage of tax planning techniques such as:

  • Selling stock before year end
    • Not just high basis stock, but maybe even low basis stock depending on the state your client lives in!
    • Harvest losses to offset gains
    • Special considerations for NUA stock and dual basis ISO shares
  • Rearranging stock basis before year end
    • Gifts to spouse and other individuals
    • Gifts to non-grantor trusts
    • Contributions to partnerships
  • Smart charitable gifting before year end
    • Outright gifts
    • To a DAF or private foundation
    • To a CRT
    • To a non-grantor CLT
    • To a non-grantor completed gift trust
  • While considering other complicating issues with Tax Reform coming!

Be prepared, call us and plan right now, so you’re ready to act immediately when the Tax Reform Bill is signed into law! Terri Hilliard PC 805-201-2552