LOS ANGELES, Oct. 29, 2013 /PRNewswire/ -- With only two months remaining in the 2013 tax year, renowned tax attorney Bruce Givner, who handles many celebrity and high-net-worth clients, offers several commonly overlooked opportunities for year-end income tax savings.
1. Make a charitable contribution deduction, even if you don't know who the beneficiary will be.
There are a number of ways to make a charitable contribution deduction, such as a charitable lead annuity trust, a charitable limited liability company, and a charitable reminder trust. But even if you haven't determined who the ultimate beneficiary will be, you can still open a donor advised fund at a community foundation (e.g. the California Community Foundation) and receive the deduction this year while you decide on the beneficiary next year.
2. Invest in oil and gas drilling partnerships.
These types of partnerships offer 90-100% deductions for the investment, and may provide distributions of 5-9% in gas, or 15% in oil, over decades. They can also be legacy assets for heirs. Gas prices may be at historic lows right now, but as the U.S. opens up its export market to a hungry global marketplace, prices are likely to increase over the coming decades.
3. Form a Section 831(b) captive insurance company.
For closely held businesses, this can be the largest deduction available to you as the first $1.2 million of premium can be received tax free by the captive. It's typically owned by you (the operating business owner) or by a trust that benefits your heirs. Currently permissible in 30 states, formation can be complicated and captive managers may charge a hefty fee. Nonetheless, the overall advantages—to asset protection, risk mitigation, and income and estate tax benefits—can be stunning.
4. Make sure you have a defined benefit pension plan.
Skewing the benefits to the owner-employee is still the safest and second biggest deduction available to businesses with 30 employees or less. Enlisting a skilled tax attorney to work with the actuary can help you achieve a very favorable result.
Bruce Givner, managing partner at Givner & Kaye in Los Angeles, has practiced tax law for more than three decades. He specializes in income tax planning, estate tax planning, asset protection, sophisticated retirement planning, tax litigation, charitable giving and more. www.givnerkaye.com
SOURCE Givner & Kaye