As a Part of Your Tax Advice We Have Done The Following:

(If you are viewing this document on your computer - notice there are circles preceding some of the Bold text.  If you "left-click" on the circles, you will collapse or expand the outline.)

• Searched for credits:  A credit is a dollar-for-dollar reduction in your tax. The impact of a credit or two on your tax bill cannot be overstated, and the revised tax laws have introduced several new credits that will affect hundreds of thousands of families in the United States.
  • It may seem obvious, but don't forget to claim all of your withholdings. Most people have little trouble reporting the withholdings on their W-2s, but many people fail to claim any withholdings on dividends or interest income. In special circumstances, such withholdings are required and are reported on your 1099 forms.
  • Child Tax Credit: For instance, every family with an annual income of less than $110,000 qualifies for a $500 credit for each child in the family under the age of 17.    The child tax credit is a dollar-for-dollar reduction in your taxes. In 1998, the credit was $400 for each qualifying child. A qualifying child is one who was under age 17 at the end of 1999, claimed as your dependent, and is your son, daughter, adopted child, grandchild, stepchild or foster child. For 1999, the credit increases to $500 per child. It stays the same in 2000. The amount of your credit is reduced beginning at income levels of $110,000 for joint returns ($75,000 for individuals and $55,000 for married couples filing separately), and is phased out as your income rises above that amount. Make sure you take the credit if you qualify
  • New educational tax credits are also available. The Hope Scholarship provides a tax credit for college tuition for the first two years that a student is in college. It is 100% of the first $1,000 in tuition and 50% of the next $1,000 for a potential total of $1,500 in direct tax reduction.
  • A second educational credit available is the Lifetime Learning Credit, which kicks in after you (or the student in your household) no longer qualifies for the Hope. It is 20% of up to $5,000 in tuition for graduate or undergraduate expenses.
  • While not technically a credit, remember to use up your balance in your flexible spending account health plan at work. Sometimes called a cafeteria plan, these programs allow you to set aside pre-tax dollars to pay for health and child care. You lose any money that you don't use as these funds typically don't carry over from one year to the next.
  • Credit for child care - or a totally disabled dependent
  • Credit for the elderly
  • Credit for the disabled
  • Adoption credit
  • Foreign Tax Credit
  • INVESTMENT TAX CREDIT - UPDATED 3468 - Rehab, Reforestation and Enerrgy
  • Work Opportunity Credit 5884
  • Welfare-to-Work Credit 8861
  • Alcohol used as fuel credit 6478
  • Alternative Source Fuel Credit 6765
  • The original purchaser of a qualified diesel-powered highway vehicle purchased before August 21, 1996, was eligible to claim a credit in the year the vehicle was purchased, which was intended to offset future diesel fuel taxes.
  • Non-highway use fuel credit
  • Credit for increasing research activities
  • Low-income housing credit 8586
  • Enhanced Oil Recovery credit 8830
  • Disabled Access Credit 8826
  • Renewable Electricity Production Credit 8835
  • Indian Employment credit 8845
  • Credit for current year employer social security and Medicare taxes paid on certain employee tips (8846)
  • Orphan Drug Credit 8820
  • Credit for contributions to selected community development corporations 8847
  • Trans-Alaska pipeline liability fund credit
  • General credits from an electing large partnership 1065-B
  • Passive activity credits allowed
  • Alternative Minimum Tax Credit
  • If you work for more than one employer, or did you change jobs during the year? If so, you may have had too much Social Security withheld from your wages.
  • Carryovers of unused credits
  • Earned income credits: The earned income credit is a form of negative income tax. That means that the credit can reduce your taxes below zero and the IRS pays you the difference.  The amount of the credit you can claim depends on whether you have one, more than one, or no qualifying children. For 1999, the parameters of the credit are as below:
    • The earned income amount is the amount of earned income that's allowed and still receives the full credit. The phaseout shows how much income you can earn before the credit begins phasing out, and the final figure shows the annual income at which no credit is allowed.
    • In order to claim the credit, you must have an eligible child or meet other qualifications. While the qualifications are complicated, they're worth pursuing, especially since the credit is designed to help low-income families where even a few extra dollars can make a substantial difference in living standards.
    • The following table will assist:

     

    • No. of Children	Max. Credit	Earned Income	Credit Phaseout Begins	Complete Phaseout
      1	$2,312	$6,680	$12,260	$26,928
      2 or more	$3,816	$9,390	$12,260	$30,210
      None	$347	$4,460	$5,570	$10,030

• Defer income
  • How can you defer income? Certain kinds of investments allow you to postpone paying taxes from the year in which the income is earned to a later year. Series EE savings bonds offer this feature, for instance.
  • Alternatively, if you buy certain six-month bank certificates of deposit (CDs) now, you can defer paying the tax on the interest until you file your return for the subsequent year. The CD must be the type on which the interest is neither credited to your account nor made available to you without substantial penalty before the maturity date.
  • An investment in U.S. Treasury bills provides a similar benefit. This is because the interest on them is not recognized until the bills are redeemed.
  • How about earned income? If you’re an employee who’s due a bonus, make sure it comes in January rather than December. Alternatively, if you’re self-employed, send out your billing later in the month so that you receive your checks after Dec. 31. I personally go on vacation the last two weeks in December. That way I cannot receive any checks until January.
  • If you’re self-employed, don’t forget to set up your Keogh plan before Jan. 1. The plan does not have to be funded until your return is due, but the account must be set up this year or no contributions will be allowed.

• Accelerate expenses:  Accelerating certain expenses gives you an immediate tax benefit. You get to deduct the expenses from your taxes, even if you waited until Dec. 31 to make the purchase or write the check.
  • If you are self-employed, buy your first three months of supplies for the next year in December. You can always use more stamps. Employees can accelerate employee business expenses as well. Pay any outstanding bills on Dec. 31. If you don’t have the cash, use your credit cards. The IRS gives you the deduction in the year of the charge, not when you actually pay the bill.
  • Investment expenses can also be accelerated. Renew your subscriptions to The Wall Street Journal, Barron's and TheStreet.com. While we’re in the investment arena, don’t forget to recognize any capital losses you may have incurred during the stock market’s recent swings. Capital losses can be used to offset any capital gains you may have had on a dollar-for-dollar basis, and up to another $3,000 to reduce your ordinary income. If you have losses that exceed $3,000, that money can then be carried forward to future years. If you think the stock will recover over time, sell now, recognize the loss, get the tax benefit, and then repurchase the stock next year. You must, however, wait 31 days after the sale to repurchase or your loss will be disallowed as a “wash sale.”
  • While we’re on capital assets, remember that the Internal Revenue Restructuring and Reform Act of 1998 reduced the holding period for long-term capital gains from 18 months to 12 months. That means any profits you make on investments sold after you've owned them 12 months will be taxed at 20% rather than your marginal tax rate.
  • Certain interest and tax payments can also be accelerated. Some of these are one-time advantages, of course, but they offer advantages in a year that you've had high income. For example, your Jan. 1 mortgage payment really represents interest for the month of December. Make the payment on Dec. 31 of the previous year. By accelerating the payment by one day, you get an additional deduction for the interest paid. The price you pay is that you have to figure the additional interest yourself and add it to the amount reported on your 1098 by your lender. But amortization schedules are easy to generate and the savings are well worth it.
  • If you're self-employed and pay estimated state income taxes, the same concept works. By paying your state estimated income taxes on Dec. 31, 15 days before they are due, you get to deduct them a whole year earlier.
  • If your medical expenses exceed 7.5% of your adjusted gross income, try to accelerate future payments. For example, orthodontia expenses, or elective surgery costs, could be paid in December rather than next year.
  • Don’t forget the new opportunities created by the 1997 Taxpayer Relief Act. The income limits have been raised for the traditional IRA and, if you qualify, you should consider the creation of a Roth IRA.

• Deducted Expenses - those which are deductible regardless of itemizing
  • Retirement Deductions - IRA Deductions

    The 1997 tax act expanded the availability of traditional Individual Retirement Accounts (IRAs). Under the new law, the income phaseout amounts will increase modestly over the next several years as per the table below:
    
    Phaseout for Taking the IRA Deduction

  Year	Filing Jointly (AGI)	Filing Single (AGI)
  1998	$50,000 to $60,000	$30,000 to $40,000
  1999	$51,000 to $61,000	$31,000 to $41,000
  2000	$52,000 to $62,000	$32,000 to $42,000
  2001	$53,000 to $63,000	$33,000 to $43,000
  2002	$54,000 to $64,000	$34,000 to $44,000
  2003	$60,000 to $70,000	$40,000 to $50,000
  2004	$65,000 to $75,000	$45,000 to $55,000
  2005	$70,000 to $80,000	$50,000 to $60,000
  2006	$75,000 to $85,000	0
  2007	$80,000 to $100,000	0

  • Student Loan Interest

  • This deduction for student loan interest is an above-the-line deduction. That means you can claim it even if you don't itemize your deductions.

  • Medical Savings account deduction
  • Moving Expenses (for personal items - see Business for business moving costs)
  • 50% of the Self-Employment tax
  • Self-Employed health insurance deduction

  • This is another above-the-line deduction for those who qualify. Self-employed individuals don't qualify for the employee exclusion for health-insurance premiums paid by their employers because they are their own employer. To compensate for this, a deduction is allowed for health-insurance premiums paid by the self-employed.

  • Keogh/HR10 Plans
  • SEP Pension deduction
  • SIMPLE Pension Deduction
  • Early cashing in of CD's or other similar penalties
  • Alimony Paid
  • Dependent Exemption deduction:  Parents, Children, Grand-children, step-children, foster children, and others - consider that some of the student exchange programs may offer benefits specific to those programs.  There may be some expenses that qualify for deduction, even where the taxpayer cannot claim the exemption for dependents.   Also consider the filing status.
  • IRA Drawing:  If no deduction was received by the t/p when the IRA funding was made, then the drawing from the IRA is not taxable - other penalties may apply, but the basis of the IRA MUST BE DETERMINED

• Business - Self, Small Office - Home Office, Corporations, etc.
  • Home office deductions
  • Hiring minor children: 

    If you hired your child to work for your business in 1999, you could have paid that child as much as $6,300 without having to pay any taxes. That's the sum of the standard deduction of $4,300 and an IRA deduction of $2,000. If you were in the 28% bracket, that would have saved you $1,764 in income taxes and potentially another 15.3% in Social Security/Medicare taxes ($964) for a total tax savings of $2,728.

    Do you have kids? Are you giving them an allowance? If your kids can work for you in your business, you have converted their personal allowance into deductible compensation. Your kids can earn as much as $6,300 in 1999 (standard deduction of $4,300 plus IRA of $2,000) and pay zero in federal taxes.
    
    Moreover, if your kids are under 18 and work for your unincorporated business, no Social Security or Medicare taxes need be paid.
    
    The payments to your kids, however, would be deductible for you. Remember that you don't have to give them more than $6,000 in payments. But, to the extent you're giving them money anyway, by structuring the payments as salary, the IRS is funding those payments.

  • Medical insurance premiums paid by your employer are excluded from your income. (limits and exceptions apply)
  • Group term life insurance coverage of $50,000 or less provided to you by your employer is excluded from your income (limits and exceptions apply)
  • The cost of group term life insurance provided by an employer is included in wages for FICA (Federal Insurance Contributions Act), or Social Security, purposes to the extent that it is included for income tax purposes. However, if you need insurance, the use of this technique provides that insurance at either a tax-reduced or completely tax-free cost.
  • One of the least appreciated of these special perquisites are those holiday and special event gifts that employers provide
  • The law does’t tax reimbursement expenses that are truly reimbursements for expenses of your employer rather than income amounts truly compensatory in nature.
  • This category includes such items as reimbursements for cab fares and payment of supper money. If you, as an employee, can arrange with your employer to work from 11 a.m. to 7 p.m. rather than from 9 a.m. to 5 p.m. and your employer agrees to provide you with a dinner allowance, these personal expenses can be converted into nontaxable income. Arranged correctly, would’t it go down smooth to have the Internal Revenue Service help buy you dinner? (limits, exceptions, and paperwork documentation apply)
  • The value of dependent care assistance that an employer provides for an employee under a dependent care assistance program is not generally included in your income. However, if payments for child care expenses are made to your child under age 19, or who qualifies as your dependent, such payments are taxable. You can, however, exclude payments to a child 19 or older who is not your dependent.  The value of dependent care assistance that you may exclude from your income is limited. The Tax Reform Act of 1996 put a $5,000 cap on dependent care expenses. Moreover, any amounts excluded under a dependent care assistance program reduced the amount of expenses otherwise eligible for the child care credit.
  • The value of meals and lodgings provided to you, your spouse, or your dependents, without charge by your employer, is not taxed if the following three criteria are met:
    1. The meals or lodgings are provided at your employer’s place of business.
       
    2. The meals or lodgings are provided for the convenience of your employer.
       
    3. In the case of lodgings (but not meals), you must accept the lodging at your employer’s place of business as a condition of your employment. This means that you must accept the lodging to carry out the duties of your job properly, for example, if you must be available for duty at all times.
  • An employer can give discount fare cards, passes or tokens to an employee who takes public transportation to work. If the subsidy provided is not worth more than $65 per month to you as an employee, it is considered a de minimis fringe benefit and, while the employer can deduct it, you do not receive any taxable income. Moreover, employer-provided free parking, up to a maximum value of $175 per month, is also excluded from income.
  • Moving costs

• Tax Free Cash Flow - Income
  • Tax exempt bonds
  • Drawing from partnership
  • Borrowing - financial institutions
  • Borrowing - on life insurance
  • Borrowing - margin account
  • Roth IRA
  • Municipal Bonds and Bond Funds
  • Gifts to you
  • Inheritance to you
  • Borrowing

• Reducing Tax Surcharges
  • IRA Drawing - medical expenses, annuitize the IRA, rollovers, qualified higher-education expenses, first-time home buyer," defined as anyone who has not had an interest in a primary residence for the past two years.
• Reducing Tax on Portfolio Income
  • Long Term Capital Gains

    Long-term capital gains are the profits from the sale of capital assets (such as stock or other investments) that you held for more than one year. The net long-term capital gains (profits made after subtracting any capital losses) receive special treatment. The maximum tax rate that you pay on such gains is limited to 20%, regardless of your tax bracket.
    
    For people in higher tax brackets, the maximum tax rate on long-term capital gains offers some huge advantages, showing that patience can pay.
    
    So use the capital gains and losses rules to your advantage. Both long-term and short-term capital losses are allowed to offset any capital gains on a dollar-for-dollar basis. The excess losses reduce your other (ordinary) income. The maximum you can deduct in any given year is $3,000, however. Any losses that exceed the $3,000 limit can then be "carried forward" into future years until you have fully written off the losses.

  • Tax Free income

    Having a maximum marginal tax rate of 20% on net long-term capital gains is good; having a rate of zero is even better. Any interest earned on municipal bonds -- bonds issued by the state or any subdivision of the state -- is not taxable for federal income tax purposes. (Some special purpose municipals may be subject to the alternative minimum tax but that discussion is beyond the scope of this article.) Because these are tax-free bonds, they usually pay a lower rate of interest than taxable bonds.
    
    In comparing returns, you should always compare the after-tax returns. Whichever investment offers the higher return should be your first choice, in most cases. Don’t forget to consider the impact of state taxation in computing final yield. For example, most states do not tax interest on municipal bonds issued within their own borders but may tax the interest on bonds issued by other states. Check the rules for your state at right.

  • US Savings Bonds

    To help finance qualified higher education expenses, Congress created a new incentive to purchase U.S. Savings Bonds. Under current law, interest that accrues on savings bonds does not have to be reported until the bonds are redeemed, unless you decide to report the increase in redemption value each year. For years after 1989, you can potentially exclude all or a portion of the interest that accrues on the bonds. The steps necessary to qualify for the exclusion are listed at right.
    
    If your adjusted gross income in the year of redemption exceeds $79,650 on a joint return or $53,100 on all other returns, there is a phase-out of the benefit. This phase-out eliminates all of the benefits for families with adjusted gross incomes of $109,650 or more, or $68,000 on others.
    
    A qualified U.S. Savings Bond is any bond issued after 1989 at a discount to an individual who has attained age 24. Note that you, as the older generation, must buy the bond. If you put the bond in the name of the child, you lose the exemption. Remember the government bases the tax rate on the income you’re making at the time you redeem the bond, not your income now. If you expect to be making substantially more when you redeem the bond, that higher income might disqualify you.

  • Reducing taxable Social Security (do not confuse with the reduction in Social Security Benefits)
    One way to potentially avoid or reduce this problem is to switch from tax-free income to tax-deferred income. With a tax-deferred annuity, you ‘re not taxed on the income earned. That happens once you take the distribution from the annuity. The deferred income earned by the tax-deferred annuity does not count toward the determination of the amount of Social Security that will be taxed. Therefore, if you do not currently need the cash flow from the investment, a tax-deferred annuity should be considered as a way to potentially reduce your taxes on your Social Security receipts.
  • Prevent the wasting of your Social Security Benefits - Portfolio Income is not "Earned Income" and therefore will not reduce your Social Security Benefits.
    
• Itemized Deductions
  • Medical expenses: Medical costs are allowed only to the extent they exceed 7.5% of your adjusted gross income.
  • Taxes: The government lets you deduct your state and local income taxes, personal property taxes, intangible taxes, real estate taxes, and any unemployment/disability taxes you pay. Not deductible are federal income taxes and Social Security taxes (unless you overpaid and then the overpayment is a tax credit).
  • Interest payments: Personal consumer interest, such as credit card interest, is not normally deductible. But the interest on your home mortgage (primary and secondary residences) and interest on your investment income are deductible.
  • Miscellaneous: Miscellaneous deductions may be counted only after they exceed 2% of your adjusted gross income. These include job-hunting expenses, subscriptions to work-related publications and any fees you paid a professional tax preparer.
  • The tax planning strategy here is to “bunch” your below-the-line deductions into a single year. Remember that they are only beneficial if they exceed your standard deduction. You can maximize your tax position by shifting such items as charitable donations and controllable medical expenses (e.g., orthodontia) into a single year. The next year, take the standard deduction if it exceeds your itemized deductions. This allows you, in the appropriate situations, to “double dip” with respect to these deductions.
• Decreasing Gift Taxes
  • Exempt Gifts

    Checks directly to health care institutions and professionals

    Checks directly to educational institutions for education expenses

    The first $10,000 of gifts during the calendar year

  • Splitting gifts
• Choice of Business Entity
  • Sole Proprietorship
  • S Corporation
  • C Corporation
  • Limited Liability Company (LLC)
  • Limited Liability Partnership
  • Registered Limited Liability Partnership
• Use of Trusts
  • Charitable Remainder Trust
  • Charitable Lead Trust
  • Qualified Personal Residence Trust
  • Minor's Trust
  • Annual Exclusion Trust
  • Living Trust
  • Credit Shelter Trust (Bypass Trust)
  • Offshore Trust
• Use of Partnerships
  • Family Limited Partnerships
  • Limited Partnership
• Decreasing Costs Other Than Tax
  • Business
  • Personal
  •  
• Structuring the Portfolio and Planning for the short term and long term
  • What to have accomplished by next year end
  • Considered quarterly checkups
  • Financial Planning - short form, piece-meal plan (gift, estate, single-item purchase, etc.), intermediate plan or comprehensive plan.
    

  
  
  
  
  

SPECIFICALLY FOR THE STAFF OF BOB PARRISH CPA PC

Memo:  In addition to this list be absolutely certain to use and mark off the items in the Exit Interview form for tax returns.

Year-End Planning Checklist for Individuals 

The following questions can help you identify actions to take before year end to ensure that you pay the least tax under the current law. 

• Have you projected your 1999 and 2000 tax liabilities? 
• If you expect that your 1999 marginal tax bracket will be the same or higher than your 2000 bracket, have you considered deferring income and accelerating deductions? 
• If you expect that your 1999 marginal tax bracket will be lower than your 2000 bracket, have you considered accelerating income and deferring deductions? 
• If you expect to be subject to the alternative minimum tax (AMT) in 1999, have you considered that certain expenses (such as taxes and miscellaneous itemized deductions) will not be deductible for AMT purposes? 
• If married, have you considered filing separately? 
• If you are unmarried and pay more than half the cost of maintaining a home that houses a dependent parent or child, have you considered filing as head of household?
• Have you considered the $500 per child - child tax credit?
• Have you considered the education tax incentives?
• Have you considered dependant care credit?
• REVIEW YOUR INCOME 
• If you are self-employed and use the cash method of accounting, have you considered deferring billing and collection activities to 2000? 
• If you have any control over when you receive a salary or bonus, have you considered whether accelerating amounts into 1999 or deferring amounts into 2000 is best for you? 
• Have you considered strategies to shift income to children and other relatives in lower tax brackets? 
• If any of your children reached 14 years of age prior to December 31, 1999, have you considered changing their investment strategies accordingly? 
• Have you and your spouse considered all the children, grandchildren and other family members and friends to whom you could each give up to $10,000 or $20,000 if gift splitting, to take full advantage of your annual gift tax exclusion? 
• Have you considered whether in light of the trust tax rates and brackets - distributions from a complex trust will reduce your family's overall taxes? 
• Have you considered that if you accelerate 2000 income into1999 you may need to adjust your withholding or estimated tax payments? 
• If you have more than one employer, will you be entitled to a credit for overpayment of Social Security tax? 
• Have you examined ways to reduce your Medicare taxes? 
• EXAMINE YOUR DEDUCTIONS 
• Have you tried to "bunch" medical expenses and miscellaneous deductions into either 1999 or 2000 to exceed the respective 7.5% and 2% limits on these deductions? 
• Have you considered whether you are entitled to deductions for a parent's medical expenses? 
• If your adjusted gross income exceeds $126,600, have you reviewed the impact of the 3% reduction rule related to your itemized deductions? 
• Have you reviewed your interest expense to determine the portion which is deductible? 
• Have you considered a home equity loan to pay off loans on which the interest is nondeductible? 
• Will you pay margin interest by year end so it will be deductible? 
• Have you considered charitable giving strategies to create current tax deductions? 
• Have you identified appreciated assets for charitable donations so you avoid capital gains tax on the appreciation and receive a charitable deduction for the fair market value of the asset? 
• If you plan to make large charitable gifts over several years, have you considered establishing a foundation? 
• Have you considered, if applicable, paying your fourth quarter state estimated payment in December 1999? 
• Have you considered whether your second half 1999 real estate taxes should be paid in December, 1999 or January, 2000? 
• Do you know that long term care premiums are deductible?
• CONSIDER RETIREMENT PLANS 
•  Are you aware of the repeal of the tax on excess distributions and excess accumulations?
•  Have you maximized your qualified retirement plan contributions? Note: 401(K) limit for Year 2000 is $10,500.
•  If you have self-employment earnings, have you established a simplified employee pension (SEP) or Keogh retirement plan? Maximum SEP1999 $24,000 year 2000 $25,500.
• Have you considered the Roth IRA?
• Have you considered the education IRA?
• Have you considered a standard deductible IRA (if eligible)?

• TAKE A LOOK AT YOUR INVESTMENTS 
• Do you know that a nonworking spouse may generally contribute up to $2,000 to an IRA? 
• Do you know that generally if you sell your principal residence up to $500,000 of gain realized by a married couple filing a joint return or $250,000 of gain realized by a single individual may be excluded from taxable income.
• Have you considered selling potentially "worthless" securities to an independent party to ensure deductibility? 
• To minimize your gain, have you specifically identified securities you sold? 
• Do you realize that if you have capital gain from a passive activity, you may be able to offset the gain with both unused capital losses and suspended passive losses? 
• Have you considered modifying your portfolio to emphasize long-term growth rather than current income taxed at ordinary income rates?
• Have you considered sale of securities before ex- dividend dates to increase capital gains and reduce ordinary income?
• Have you considered use of stock options to convert ordinary income into capital gains?
• Have you reviewed unrealized investment losses to determine when it is best for you to recognize them? 
• Have you considered selling securities with an unrealized loss, either by waiting 31 days to repurchase similar securities or by purchasing similar securities 31 days before the sale, and thereby recognizing the loss but still keeping the securities? 
• Have you taken advantage of "like-kind" exchanges to defer gain on the sale of real estate and certain types of investment property? 
• Have you considered holding appreciated property until your death to avoid capital gains tax? 
• Do you know whether you are entitled to use up to $25,000 in real estate losses to offset your other income? 
• Are you aware that certain open short sales are now treated as realized capital gains?
• Have you considered whether tax-exempt investments are appropriate for your situation?

Year-End Planning Checklist for Businesses 

The following questions can help you identify actions to take before year end to ensure that you pay the least tax under the current law. 

• Has the form of organization been carefully reconsidered? 
• Do you know your company's marginal tax bracket? 
• Are you sure you will not be subject to estimated tax penalties? 
• Have you reviewed your company's activities for changes you might make to reduce state and local taxes? 
• If you created a new C corporation this year, have you considered which fiscal year end would minimize your taxes? 
• If your business is an S corporation, have you determined whether traditional year-end planning (defer income and accelerate deductions) or the opposite approach will reduce your overall taxes? 
• If the alternative minimum tax is not a problem, have you considered investing your available cash in federal tax-free municipal bonds? 
• Have you reviewed opportunities for paying children a salary as a means of shifting income? 
• If your S corporation will generate losses this year, do you have sufficient basis in your stock to make the losses fully deductible? 
• Have you considered the benefits of LLC or LLP status? 
• REDUCING BUSINESS INCOME 
• If you expect losses in your C corporation this year, have you considered maximizing the losses which can be carried back to two prior profitable years, thereby generating a tax refund? 
• If your C corporation has funds to invest, have you considered investing in U.S. stocks to take advantage of the dividends received deduction? 
• If you use the cash method of accounting, have you considered delaying your billing and collection activities until January 2000 to defer income? 
• If you use the accrual method of accounting, have you considered whether you can defer paying tax on advance payments you have received? 
• DEDUCTIONS AND CREDITS 
• If you own an S corporation, do you know that expenses (such as wages and interest) due to 2% or greater shareholders must be paid by year end to be deductible? 
• If you own a C corporation -- not an S corporation -- do you understand that you can accrue compensation to shareholders with 50% or less ownership (or non-shareholders) and not pay them until 2 1/2 months after the corporation's year end? 
• Do you know that regular C corporation shareholders with more than 50% ownership must be paid compensation and reimbursed for other expenses by year end in order for these amounts to be deductible? 
• If accelerating deductions is a good strategy for you, have you tried to accelerate repairs and purchase supplies before year end? 
• If you use the accrual method of accounting, do you know that you may deduct accrued vacation pay if paid within 2 1/2 months after year end? 
• If you want to accelerate deductions, have you tried to settle disputed amounts before year end to ensure their deductibility? 
• Have you considered the benefits available from the work opportunity tax credit as a result of the nine month extension - for eligible wages paid to employees commencing employment prior to July 1, 1998.
• Have you considered the benefits of the 20% R&E tax credit?  This research and experimentation tax credit now covers expenditures paid or incurred through June 30, 1999.
• Have you considered the benefits of the 50% tax credit for expenses incurred in developing certain drugs?
• Have you considered the benefits of the welfare-to-work tax credit?
• Have you considered the increase to 60% of the Health Insurance deduction for self-employed?
• Are you aware that a deduction is allowed where a home office is used for administrative or management activities.
• STRATEGIES FOR INVENTORY 
• If traditional year-end planning is appropriate for your business, have you thought about selling inventory on consignment (Income isn't taxable until your consignee sells the property.) 
• Have the rules regarding accrual of inventory shrinkage been considered?
• If your inventory is subject to uniform capitalization rules, have current operations been reviewed to determine if any change to the computation is appropriate? 
• If your business is a C corporation, have you considered whether you can make donations that generally qualify for up to two times the items cost? 
• If your inventory costs are rising, have you considered the last-in, first-out (LIFO) inventory method? 
• If you use the first-in, first-out (FIFO) method of valuing inventory and traditional year-end planning is best for you, have you considered writing odd-lot, damaged and obsolete inventory down to its market value, if less than your cost? (NOTE: The lower value must be supported by an actual offer for sale within 30 days of the valuation.) 
• EQUIPMENT STRATEGIES 
• Have you taken advantage of the ability to deduct the cost of new property (other than real estate) up to $19,000 annually? 
• If your year-end strategy is to accelerate deductions, have you considered abandoning or selling unused business assets so you can deduct any undepreciated cost, net of any proceeds received? 
• When deciding when to place property in service, have you considered how to optimize your depreciation deductions? 

[tax savings checklist]