PricewaterhouseCoopers 2008 Guide to Tax and Financial Planning

PricewaterhouseCoopers 2008 Guide to Tax and Financial Planning

by PricewaterhouseCoopers LLP
Released November 2007
Publisher(s): Wiley
ISBN: 9780470139707

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Book description

A detailed guide that covers some of today’s most important tax and financial planning issues

To understand new tax rules and plan for their financial future, readers need clear explanations–not complicated tax jargon that only an accountant could understand. In straightforward and accessible language, PricewaterhouseCoopers 2008 Guide to Tax and Financial Planning explains the most recent tax law changes, answers common questions about tricky tax issues, and outlines the best ways to invest money, organize a small business, and plan for retirement under these new tax rules. Filled with valuable advice from a proven authority in the field, this guide will help readers feel confident and comfortable with important year-end tax planning.

PricewaterhouseCoopers (www.pwc.com) provides industry-focused assurance, tax, and advisory services for public and private clients. More than 120,000 people in 139 countries connect their thinking, experience, and solutions to build public trust and enhance value for clients and their stakeholders.

Table of contents

  1. Copyright
  2. Acknowledgments
  3. Introduction
    1. About PricewaterhouseCoopers
    2. How to Use This Book
    3. Let's Get Started
  4. 1. What Tax Changes Apply in 2007?
    1. Highlights of Recently Enacted Legislation
      1. Tax Increase Prevention and Reconciliation Act
      2. Heroes Earned Retirement Opportunities Act
      3. Pension Protection Act of 2006
      4. Tax Relief and Health Care Act of 2006
      5. Small Business and Work Opportunity Tax Act of 2007
    2. Other Important Legislative Provisions
      1. Increased Penalties for Failure to Disclose Foreign Financial Accounts
      2. Tax Rates, Tax Credits, and Deductions
      3. Ten Percent Income Tax Bracket
      4. Upper‐Income Individuals Will Not Lose Deductions
      5. Personal Exemptions Will Not Be Lost
      6. Alternative Minimum Tax
      7. Investment Income
      8. Long‐Term Capital Gains
      9. Reduced Dividend Rates
      10. Estate and Gift Taxes
      11. Exemption Increases
      12. Rate Reduction
      13. Loss of Full Basis Step‐Up
    3. What's Next?
  5. 2. Investments and Stock Options
    1. Capital Gains
    2. Favorable Rates
    3. Exceptions to the 15 Percent Rate
    4. Collectibles, Qualified Small Business Stock, and Depreciated Real Estate
    5. No More Advantage for Five‐Year Gains
    6. Effect of Past Election to Get the 18 Percent Rate
    7. Netting Rules
    8. Capital Losses
    9. Wash Sale Rule
    10. Protecting and Postponing Stock Gains
    11. Qualified Small Business Stock
    12. Passive Activity Losses
    13. Careful Record Keeping: Identification of Securities
    14. Dividends
    15. Mutual Funds and Real Estate Investment Trusts
    16. Preferred Stock
    17. Short Sales
    18. Margin Accounts
    19. Foreign Tax Credit
    20. Impact of Reduced Tax Rates on Investment Allocation
    21. Tax‐Exempt and Taxable Bonds
    22. Taxable Tax‐Exempt Bonds
    23. Bond Premium or Discount
    24. Florida Intangibles Trust
    25. Nonqualified Stock Options
    26. Incentive Stock Options
    27. Idea Checklist
  6. 3. Retirement Planning
    1. Employer Plans
      1. Qualified Retirement Plans
        1. Defined Contribution Plans
          1. Bigger Contributions Allowed
          2. Profit‐Sharing Plans
          3. 401(k) Plans
          4. 401(k) Contribution Limits
          5. Savings Incentive Match Plan for Employees
        2. Defined Benefit Pension Plans
          1. Increase in Benefit Limit
      2. Nonqualified Deferred Compensation Plans
    2. Your Resources
      1. Keogh Plans
      2. Simplified Employee Pension Plans
      3. Traditional and Roth Individual Retirement Accounts
        1. Roth 401(k)
        2. Higher Contribution Limits
        3. Traditional Individual Retirement Accounts
        4. Conversions to Roth Individual Retirement Accounts
      4. Tax Credit for Retirement Saving
      5. Charitable Remainder Trusts
      6. Tax‐Deferred Annuities
      7. Split‐Dollar Life Insurance
      8. Universal Variable Life Insurance
    3. Professional Retirement Services
    4. Social Security
    5. Required Retirement Plan Distributions
    6. Idea Checklist
  7. 4. Tax Advantages of Home Ownership
    1. Tax Benefits of Owning a Home
      1. Mortgage Interest
      2. Home Equity Loans
      3. Mortgage Insurance Premiums
      4. Vacation Homes
      5. Rental Properties
      6. Home Office Deduction
        1. Exclusive and Regular Use
        2. Principal Place of Business
      7. Personal Residence Trust
    2. Home Sales
      1. Principal Residence Gains Exclusion
      2. Qualifying for the $500,000 Exclusion
      3. Partial Exclusion
      4. Partial Exclusion Rule for Joint Filers
    3. Home Purchases
      1. Real Estate Taxes
      2. Mortgage Points
    4. Idea Checklist
  8. 5. How to Maximize Savings for Education
    1. Qualified Section 529 Tuition Programs
    2. What Expenses Qualify?
    3. Gift and Estate Tax Breaks
    4. Coverdell Education Savings Accounts
    5. Roth IRAs
    6. Traditional IRAs
    7. Helping Outstanding Pupils Educationally Scholarships and Lifetime Learning Credits
    8. U.S. Savings Bonds
    9. Home Equity Loans
    10. Student Loans
    11. Tuition Deduction
    12. Relatives
    13. Income Shifting and Capital Gains
    14. Employer Education Assistance
    15. Idea Checklist
  9. 6. Account‐Based Health‐Care Arrangements
    1. Health Savings Accounts
    2. Eligibility
    3. Contribution Limits
    4. Health Reimbursement Arrangements
    5. Flexible Spending Accounts
  10. 7. Estate Planning Ideas
    1. How Estate and Gift Taxes Work
    2. Amounts Exempt from Tax
    3. Gift and Estate Tax Rates
    4. Planning for Phasedown and Repeal of the Estate Tax
    5. Draft a Will
    6. Review How Your Property Is Owned
    7. Consider State Death Taxes
    8. Give Gifts
    9. Consider Valuation Discounts
    10. Consider Trusts
      1. Credit Shelter or Family Trust
      2. Life Insurance Trust
      3. Grantor Retained Annuity Trust
      4. Qualified Personal Residence Trust
      5. Dynasty Trust
      6. Charitable Remainder Trust
      7. Charitable Lead Trust
      8. Intentionally Defective Trust
      9. Qualified Domestic Trust
      10. Stock Option Trust
    11. Effect of Reduced Tax Rates on Dividends
    12. Trustee's Investment Decisions
    13. Allocation of Expenses
    14. Give a Roth IRA
    15. Pay Gift Taxes Now
    16. Idea Checklist
  11. 8. Charitable Giving
    1. Charitable Deductions
    2. Charitable Contributions
    3. Deductible Contributions—Quick Guide
    4. Nondeductible Contributions—Quick Guide
    5. Valuation Issues
      1. Retail Property
      2. Stocks and Bonds
      3. Closely Held Businesses
      4. Notes
      5. Life Insurance
      6. Real Estate
      7. Artwork: Paintings, Antiques, and Other Objects of Art
      8. Jewelry and Gems
      9. Used Cars, Boats, and Aircraft
      10. Used Clothing and Household Goods
      11. Hobby Collections
    6. IRA Assets
    7. Appraisals and Substantiation Requirements
    8. Penalties for Overvaluation
    9. Reduction of Contribution Amount
    10. Percentage Limitations
    11. Private Foundations
    12. Nonoperating Foundations
    13. Operating Foundations
    14. Pass‐Through Private Foundations
    15. Tax Compliance and Operating Rules for Private Foundations
    16. Alternatives to Private Foundations
    17. The 50 Percent Limitation
    18. The 30 Percent Limitation
    19. The 20 Percent Limitation
    20. Other Alternatives
  12. 9. Quick Planning Guide
    1. Tax Reduction
    2. Tax Deferral
    3. Income Shifting
    4. Year‐End Capital Gains Checkup
    5. Year‐End Alternative Minimum Tax Diagnosis
  13. 10. Accelerating Deductions
    1. State and Local Taxes
    2. Interest
      1. Home Mortgage Interest
      2. Business Interest
      3. Investment Interest
      4. Passive Activity Interest
      5. Student Loan Interest
      6. Personal Interest
    3. Medical Expenses
    4. Charitable Contributions
      1. Property Donations
      2. Substantiation Requirements
      3. Deferred Giving
    5. Passive Activity Losses
    6. Casualty Losses
    7. Miscellaneous Itemized Deductions
    8. Moving Expenses
    9. Idea Checklist
  14. 11. Deferring Income
    1. Year‐End Bonuses
    2. Deferred Compensation
    3. Stock Options or Stock Appreciation Rights
    4. Treasury Bills and Bank Certificates
    5. Dividends
    6. Installment Sales
    7. U.S. Savings Bonds
    8. Annuities
    9. Individual Retirement Accounts
    10. 401(k) Plans
    11. Shifting Income to Family Members
  15. 12. Alternative Minimum Tax
    1. Understanding the Alternative Minimum Tax
    2. Alternative Minimum Tax Computation
    3. The More, the Not‐So‐Merrier
    4. Minimum Tax Credit
    5. Top Ten Items That May Cause the AMT
    6. An Unpleasant Surprise for Many
    7. Alternative Minimum Tax‐Planning Strategies
    8. Taxpayers in the Alternative Minimum Tax for 2007 Only
    9. Taxpayers in the Alternative Minimum Tax for 2007 and Beyond
  16. 13. Year‐End Planning for Business Owners
    1. Increased Section 179 Expense Election
    2. Retirement Plans
    3. Bonuses and Deferred Compensation
    4. Income Deferral or Acceleration
    5. Alternative Minimum Tax Planning
    6. Accounting Method Changes
    7. Personal Holding Company Tax
    8. Succession Planning
    9. Buy‐Sell Agreements
    10. Deferred Compensation Elections
    11. Covenant Not to Compete
    12. Earn‐Out (Contingent Sale Price)
    13. The Importance of Early Planning
    14. Do Not Wait to Plan
    15. C Corporation versus S Corporation Comparison
  17. 14. Fundamental Tax Concepts
    1. Gross Income
    2. Adjusted Gross Income
    3. Modified Adjusted Gross Income
    4. Itemized or Standard Deductions
    5. Personal and Dependent Exemptions
    6. Marital Status
    7. A Tax Credit or a Deduction
    8. Taxable Income
    9. Marginal and Effective Tax Rates
    10. Social Security Taxes and Benefits
    11. Marriage Penalty
    12. Accountable Plan
    13. Tax Effects of Alimony
    14. Social Security Taxes for Domestic Employees
    15. Estimated Tax Payments
    16. January Tax Strategy Idea Checklist
    17. Conclusion
  18. About the Authors

Product information

  • Title: PricewaterhouseCoopers 2008 Guide to Tax and Financial Planning
  • Author(s): PricewaterhouseCoopers LLP
  • Release date: November 2007
  • Publisher(s): Wiley
  • ISBN: 9780470139707