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Looking Ahead:

Year-End Tax Planning

by Chuck Missler


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The close of the year is a traditional time to review your capital gains and losses, including those not yet taken by closing out existing positions. Often it is a prudent time to offset a gain with a loss to minimize tax implications.

Remember, in planning donations it is usually advantageous to donate highly appreciated securities rather than cash, since you can avoid the capital gains taxes on the gains while still gaining the full deduction for the donation. Your recipient can then liquidate for its own purposes.

If you are donating assets other than marketable securities, you will also want to obtain a qualified appraisal. All of this takes time and planning.

An often overlooked device is the "charitable remainder trust" as an element of portfolio planning. It is possible to transfer some of your assets into a trust, which will provide an immediate tax deduction, defer capital gains taxes, and yet still allow you to retain the benefits (income) from a portfolio during your lifetime.1 This technique is often used to dispose of highly appreciated assets.

What is also often overlooked, however, is that it can also prove effective for an income producing portfolio which has suffered a serious decline in market value.

What does one do if one is dependent upon the income from a portfolio that has significantly dropped in face value? You can place the securities (with the losses) into a specially created charitable remainder trust that will benefit some ministry of your choosing upon your death or the death of your spouse.

You can claim an immediate tax deduction on the charitable contribution while still enjoying the income from the trust during your lifetime (and that of your spouse).

Using such a structure, you could place your income-producing assets into a vehicle where you will be able to take a much larger deduction than you would be able to take on ordinary capital losses (since you deduct the principal) and your trades from that point forward would be free of concern about capital gains tax.

See your advisor to explore the possibilities.

New Years Resolutions

This is also the time for planning other personal goals for the coming year. It would be a good time to also lay out a specific plan for your spiritual "portfolio" for the coming year: a personally tailored program of expositional Bible study for the coming year, for example, see our commentaries.

Its a good time to consider a personal commitment to a specific book (and a budget for commentaries and helps!), or even plan to undertake a review of the entire Bible

What a perfect time to get a study Bible for each member of the family and set aside a specific time for study together!

Or maybe its time to teach a home Bible study. Theres no better way to "learn" a book of the Bible than to teach it, a chapter a week, to a small group.

Pray about it.

In any case, make your spiritual priorities part of your New Years resolutions!

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  1. You and your surviving spouse can retain use of the assets during your respective lifetimes. See your advisor for the spectrum of possibilities.

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