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Rimon Partner, Brent Nelson, Co-Writes Article on Stack Business and Charitable Deductions for Maximum Savings

Insight Brent Nelson Brent Nelson · November 08, 2019

Rimon's Brent Nelson co-writes part two of an article on stacking business and charitable deductions for maximum savings, and drastically magnifying the power of your clients' charitable dollars.

The Pass-Through Income Deduction under Code Section 199A (“199A Deduction”) allows taxpayers to deduct up to 20% of their pass-through business income. However, the deduction is either eliminated or limited when a taxpayer’s taxable income exceeds certain thresholds. Despite this limitation, charitably inclined high earners can stack tax savings by strategically making charitable gifts to push their taxable income below the 199A Deduction thresholds. This mechanism allows the taxpayer to receive both a federal income tax charitable deduction (“Charitable Deduction”) and the full 199A Deduction. The taxpayer has two primary options for making strategic charitable gifts: give directly to a charity in one lump sum payment or gift (“Lump Sum Method”), or give through a charitable trust. If charitable giving is done through certain charitable trusts, the taxpayer can retain an interest in the charitable gift. Either mechanism of charitable giving may allow the taxpayer substantial current tax savings while minimizing the cost to the taxpayer’s net worth. In a previous article, we covered the basics of each deduction. Now, we’ll get down to the nitty-gritty. Read the full article here.

 


Brent Nelson assists U.S. and international individuals, families and financial institutions in tax, estate planning and family business matters. In addition, he frequently speaks and writes on estate and tax developments. Brent develops estate plans in a wide variety of circumstances, from basic estate plans to complex plans for high net worth individuals and families. He also assists them with related business succession and charitable goals. For high net worth clients, he uses sophisticated tax planning techniques involving irrevocable trusts, life insurance, private foundations and family limited partnerships. Other lawyers often engage Brent to help their clients in complex planning. Read more.