Families with complicated tax challenges
Our team works closely with families that have high income or net worth to resolve the most intricate tax issues and help them meet their financial goals by offering quality and diverse services. We work regularly with business owners and executives, top producers in sales, real estate developers and professional athletes. We truly understand our client’s extraordinary needs and objectives and regularly do tax planning that significantly enhances after-tax income. High net worth individual tax is very complex and regularly involves preparation of individual tax returns and accompanying business returns, tax planning that may make a significant difference in after-tax income, and regular preparation and reassessment of estimated tax liabilities. These taxpayers may need the following:
Tax Planning for Stock Options
Stock options are Silicon Valley startups way of rewarding and retaining the sharpest engineers and managers without incurring startup costs that would curtail enterprise—and these options lend significant tax benefits! As employees sell vested options in clumps, Dunham Associates gives regular planning advice, projections and estimated payments. Frequently, we must look at documents from multiple years to calculate cost basis. While we understand NQSO’s, SARs, ESPP’s and ESOPs, we most frequently advise on the following:
Incentive Stock Options (ISO’s) and AMT
When taxpayers sell stock purchased by exercising ISOs, if the market sours after you have exercised your options and the current value of your stock is now less than what you paid, you could still be subject to the Alternative Minimum Tax. People avoid this risk by selling quickly as a “disqualifying disposition”, but then they lose the advantages of taxation at long term capital gains rates. Calculations are challenging enough that the brightest employees benefit from our help.
Restricted Stock and 83(b) elections
The best and brightest in startup companies frequently seek out our advice on restricted and 83(b) elections. Given your tax circumstances, should you pay some tax now on stock granted or pay more at exercise—and when is the best time to exercise? How can you avoid tax on phantom income? We do much more than helping you to fill out forms.
Employee Stock Purchase Programs (ESPP’s)
Employers give away discounted stock to employees they hope to reward and retain. The IRS may multiply their gifts by granting favorable capital gains rates on the growth of these stocks above the wage income granted for initial purchase. As we are not your employer, we can objectively consider waiting times, dispositions and performance and can give tax planning advice according to your needs.
Corporate and Partnership (K-1) income and passive activities
Many of our largest clients walk in with K-1’s from twenty companies which indicate the variety and expansiveness of their economic interests. Dunham Associates CPAs frequently assess the economic interrelatedness of these returns with effects on capital gains, passive income, loss carryover, interstate tax calculations, foreign tax credits and Alternative Minimum Tax.
Alternative minimum tax and Obamacare tax planning and compliance
How do you calculate AMT and how can you avoid AMT when AMT was designed to limit tax loopholes supposedly enjoyed by the rich? Without indexing to inflation, these tax are slowly becoming middle class issues—yet the rich also lose personal and dependency deductions to income indexing. AMT takes away deductions for state and local taxes, incentive stock options and certain mortgage interest. Taxation for redistribution took a “great leap forward” with the Net Investment Income Tax and Medicare surtaxes which raise taxation on both investments and earnings.
Alternative minimum tax and Obamacare tax planning and compliance
How do you calculate AMT and how can you avoid AMT when AMT was designed to limit tax loopholes supposedly enjoyed by the rich? Without indexing to inflation, these tax are slowly becoming middle class issues—yet the rich also lose personal and dependency deductions to income indexing. AMT takes away deductions for state and local taxes, incentive stock options and certain mortgage interest. Taxation for redistribution took a “great leap forward” with the Net Investment Income Tax and Medicare surtaxes which raise taxation on both investments and earnings.
Taxation of Community Property in Divorce
Wealth creators may become targets of spouses in divorce. While only lawyers can defend clients in court, we can assist with proper accounting for your personal finances or business interests, expert testimony in court, or financial assistance with negotiations. Frequently, Dunham Associates CPAs resolve challenging calculations after divorce of community property in stock options, partnership interests or realty that involve continued tax planning, projections and estimated payment calculations.
The “Kiddie Tax” and Multi-generational tax planning
If you want to pay less tax, try to give your income to as many people as possible. Certainly this strategy helps wealthy clients avoid estate tax, provided they gift in chunks under $14,000. Congress limits strategies involving children by making them pay tax at their parents’ rates—above certain minimums. Our firm does “Kiddie Tax” returns and Gift Tax Returns and helps plan tax avoidance.
Estate Tax and Charitable Contributions Strategies
Charitable gifting is a notable and noble motive for moneymaking and money distribution: Andrew Carnegie and Bill Gates have set the example. But even the most selfish of individuals may find benefits for their families in charitable remainder trusts (CRT’s), Charitable Lead Trusts (CLT’s), donor advised funds and private family foundations set up to benefit charity and family simultaneously. Dunham Associates can help you plan and project the tax consequences of gifting strategies to charities and single individuals so your money goes where you want it.
On trusts and Estates, Dunham Associates CPAs can help with objective advice when high fees or commissions are so eagerly sought by lawyers, life insurance salespeople, stockbrokers and advisors. Let our financial experts assess the value and tax effects of strategies involving family partnerships and LLC’s, installment sales to intentionally defective grantor trusts, grantor retained annuity trusts (GRATs), bypass and Life Insurance Trusts (ILITs), and qualified personal residence trusts (QPRTs). We even understand the ultimate legal tax loophole: Dynasty Trusts.