Senate tax bill full of minefields for taxpayers

Taxpayers can expect many of their cherished deductions for charitable contributions, family members, and state and local taxes to go away under the Senate tax reform legislation. Gary DuBoff, a principal in the Tax and Accounting Department at MBAF, a Top 100 Firm, recommends charitable contributions should be made before the end of the year, particularly when they involve gifts of stock. “Hidden in the Senate bill was an elimination of the adequate identification rules,” he said. “Adequate identification basically says that if you sell a security, and you’ve got two tranches, a low-basis, and a high-basis tranche, you can pick the one that you want to sell. That also applies to charitable donations. If you want to gift your low-basis shares to avoid paying the tax on the gain, you can choose to gift your low-basis shares and keep your high-basis shares. In 2018 you’re not going to have that option. In 2018, it’s going to come out of your low-basis shares first, which is OK for charitable giving, but not a good result for investments.” Read More