I have learned from experience that significant changes in Washington create tax planning opportunities. Tax laws always change significantly when the party affiliation of the President flips. It might seem prudent to wait for the laws to change before making major decisions. However, waiting for certainty may result in foregone opportunities.
In the last few days, I have received numerous calls from clients about various tax issues that are impacted by the results of the election. I plan to write a series of articles detailing the types of issues that my clients are confronting.
The first decision involves the timing of the sale of a significant asset. One client was planning to sell real estate in December. Another client was planning to sell his business in December. These clients both contacted the buyer about postponing the sales until January of 2017. They are hoping that income tax rates will be lower for sales in 2017. If rates are reduced in 2017, will be the rate decrease be made retroactive to January 1, 2017? There is precedent for making this type of a change. However, there is also precedent for making a change effective during the middle of a year. Postponing sales until January seems like a sensible strategy, though waiting longer might provide a better result.