September 2018 Client Bulletin

Our September 2018 client bulletin takes a look at:

  • The IRS’s recent notice regarding changes to the SALT deduction
  • Using life insurance as a hedge
  • Funding your buy-sell agreement with life insurance

Not sure about something you read? Think it may apply to you? Give us a call!


Update 9/4/18: Since the publication of our September newsletter, the IRS has released new guidance regarding the strategies being employed by some states (including New York) to circumvent the $10,000 limitation on the state and local tax (“SALT”) deduction (as detailed in the newsletter). The proposed regulations state that a taxpayer who makes “donations” to receive tax deductible contributions must reduce their charitable deduction by the amount of any state or local tax credit the taxpayer receives.

For example, if a state grants a 70% state tax credit and you “donate” $1,000 to your state’s charitable fund, you will receive a $700 state tax credit. Instead of getting to deduct $1,000 on your federal tax return as a charitable deduction, you must reduce the $1,000 deduction by the amount that you received as a state credit ($700), so your actual federal charitable tax deduction will be $1,000 – $700 = $300. While these regulations are not yet finalized and there are a few small exceptions, they create a serious road-block for high-tax states that had been hoping they’d found a way to skirt the new SALT limitations. We will be monitoring the situation closely as it continues to develop.