Overlooked Tax Breaks: Tax Saving Elections, Deductions, and Benefits

Tax filers and preparers can inadvertently miss numerous elections, deductions, and tax benefits. When properly applied, these items can save taxpayers significant tax dollars. The investment interest expense election allows individuals to utilize investment interest expense that otherwise would carry forward. The trade-off is the taxpayer elects to have investment income that is subject to preferential rates (15 percent) taxed as ordinary income. Determining when an immediate and often substantial tax savings outweighs a potentially more generous tax break is complicated.

The Section 266 election postpones the deduction for interest, taxes, and carrying costs and can preserve a deduction that would otherwise be lost. The $10,000 SALT cap and the high standard deduction mean that taxpayers often lose the benefit of these deductions. Making this election allows taxpayers to capitalize certain investment costs by increasing the basis of the property by these amounts.

Listen as our panel of individual income tax experts explains the application of tax breaks that can substantially reduce a taxpayer's federal tax liability.

1. Introduction
2. Qualified charitable distributions
3. Married filing separately
4. Investment interest
5. De Minimus Safe Harbor
6. Itemized deductions
7. Section 179 and bonus depreciation
8. Section 266
9. Alternative Minimum Tax

The panel will cover these and other critical issues:

• When the benefits of making the investment interest expense election outweigh the caveats
• When the election to capitalize interest, taxes, and carrying costs under Section 266 should be considered
• Applying the tax benefit rules in specific situations
• Situations where filing separately can be beneficial

Learning Objectives

After completing this course, you will be able to:

• Identify tax-saving opportunities available by making often overlooked elections
• Determine how the tax-benefit rule can negate the taxation of a state income tax refund
• Decide when making the investment interest expense election could significantly benefit a taxpayer
• Ascertain how to make an election to capitalize carry costs under Section 266

• Field of Study: Taxes
• Level of Knowledge: Intermediate
• Advance Preparation: None
• Teaching Method: Seminar/Lecture
• Delivery Method: Group-Internet (via computer)
• Attendance Monitoring Method: Attendance is monitored electronically via a participant's PIN and through a series of attendance verification prompts displayed throughout the program
• Prerequisite: Three years+ business or public firm experience preparing complex tax forms and schedules, supervising other preparers or accountants. Specific knowledge and understanding of individual income taxation, including itemized deductions, individual income tax credits, net operating loss limitations including carrybacks and carryforwards.

Strafford Publications, Inc. is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing professional education on the National Registry of CPE Sponsors. State boards of Accountancy have final authority on the acceptance of individual courses for CPE Credits. Complaints regarding registered sponsons may be submitted to NASBA through its website: www.nasbaregistry.org.

IRS Approved Provider

Strafford is an IRS-approved continuing education provider offering certified courses for Enrolled Agents (EA) and Tax Return Preparers (RTRP).