Tax Strategies in 2008

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I remember 5 years ago thinking that 2008 was going to be the best tax loophole ever. This was the year that you could sell your capital gains property and pay NO TAX or you could take a dividend distribution from your C Corporation and pay NO TAX.

How come nobody is talking about that now?

It’s still true that at the lowest income tax bracket that you will not pay any tax for portfolio income such as dividends and long-term capital gains. However, get much beyond on the lowest tax bracket and an old friend (Hah!) is going to suddenly jump up again. That’s the Alternative Minimum Tax (AMT).

Does the 2008 tax loophole still exist? Sort of. Congress’s inability to get a permanent solution to AMT means that all of us are hedging our bets with tax planning, especially as it relates to capital gains treatment.

It keeps me in business, without a doubt. But it also breeds a lot of uncertainty into the investment market and that’s not good for anyone.

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