Tax & Accounting Blog

Extended Returns—Time to Get a Jump on Tax Planning

Checkpoint, CS Tax & Asset Management Solutions, Tax October 10, 2013

A client’s tax return contains a wealth of information you can use to identify potential tax planning opportunities, demonstrate value to the client, and generate additional fees. The October 15 filing extension deadline is an ideal time to delve into a client’s return and find last-minute tax saving opportunities for the 2012 return, plus get a jump on 2013 tax planning strategies.

Proactive tax planning is critical this year, especially with the new maximum 39.6% rate on ordinary income, 20% rate on capital gains, and 3.8% net investment income tax (3.8% NIIT) for 2013 and beyond. Luckily, there’s still adequate time to lighten your client’s 2013 tax burden-and no better time to plan than when preparing their extended 2012 returns.

One possible action item still available for extended 2012 returns is to elect out of installment sale treatment for a 2012 installment sale and immediately recognize 100% of the gain. This election allows your client to take advantage of the 15% maximum capital gains rate in 2012 and avoid the new 20% rate on future cash flows in 2013 and beyond. In addition, the 3.8% NIIT is completely avoided on this gain. That’s 15% now or up to 23.8% later. Yes, there are cash flow and time value issues to consider. But higher rates are likely here to stay, and future taxes will be minimized.

2013 tax-saving strategies can be as simple as changing an investment portfolio mix, employing family members, harvesting investment gains or losses, and maximizing retirement planning contributions. They can also be as complex as a like-kind exchange, real estate activities grouping/regrouping, or business ownership structure change.

Proactive planning takes a little work, but it pays huge dividends in client savings, satisfaction, and loyalty. Use the combined power of PPC’s Deskbooks, UltraTax CS data mining, and Planner CS to identify potential tax-saving opportunities while finalizing extended returns. It’s a great way to reinforce the value you provide your clients.

For more information on PPC’s Deskbooks, visit For more information on UltraTax CS and Planner CS, visit