Arthur L. Rubin wrote:
- quote -

(He asks where he should accelerate or defer state income
tax and property tax payments. I said "Defer".)

sftydvr noted, and I recalled yesterday (December 3), that
this may not be accurate since you have a large long-term
capital gain. If your taxable income disregarding the
capital gain (but including unrecaptured depreciation) is in
less than the 25% bracket, you get approximately $10 in
total Federal tax reduction for each $100 of state and local
tax paid.

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JDL wrote:

- quote -

Are you sure you allowed for the different AMT basis for
the sale, as depreciation for AMT purposes is (or should
have been) smaller than for regular tax purposes, so
the basis adjustment or recapture is smaller, thereby
leading to a smaller AMT gain. If you ARE subject to
AMT...

- quote -

Defer.

- quote -

Defer.

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- quote -

You need to look at your best guess as to how 2004 and 2005
stack up. The AMT is so tricky that without using a good tax
planning program you are likely to get it wrong. In general,
though, if you already have an AMT problem before making
year-end tax payments, you might as well wait until 2005 to
make them. You might also be hit with AMT that year, in
which case it's no better, but you also have a year to
figure out ways to minimize AMT.

Sometimes, incurring an underpayment or late payment penalty
to the state by deferring to 2006 might even work to your
advantage.

--
Thomas E Healy, CPA, PC
1650 38th St., Ste 202W
Boulder, CO 80301
Please send email to: tom[at]tomhealycpa.com, since I block all email at my
newsgroup address.
phone (303) 443-1804
fax (720) 489-3772

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jdadverb[at]iwon.com (JDL) wrote:

- quote -

Use tax software to determine how much you want to pay in
state tax this year vs. next. As you can see with a big
capital gain, AMT kicks in and your Schedule A deductions
get limited, so it makes a difference.

BC

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It looks like I'm going to get nailed by the AMT this year
because I sold a rental property for a big long-term capital
gain. I'm still not clear about two strategies. I live in
California and we have big state income tax.

Should I:

1) Accelerate or Defer my state income tax payments? Do I
want to make the payments mostly this year b/c that helps
against the AMT or do I want to put it off until 2005?

2) Accelerate or Defer my real estate tax payments? I
usually accelerate by paying in December what I don't owe
until Q1 of next year, but it sounds like maybe I should be
holding off on them.

3) Any other key strategies?

Thanks!

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