2. Identify passive and non-passive activity income, since non-passive activity income is often excluded from NII.
3. Differentiate between trade or business income and non-trade/business income, since the ordinary course of a trade or business exception can be used to reduce NII.
4. Understand the short-term rental exception to the general classification of rental activities being classifies as passive activities.
5. Examine the potential and the implications of the grouping election, since this may allow for activities to be fully classified as a non-passive activity, effectively reducing NII.
6. For self-employed individuals, the establishment of an S corporation may be used to reclassify some income as distributions, allowing the taxpayer to mitigate some or all of the additional .9% Medicare tax.
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Depending on the taxpayer’s situation, the acceleration of income and the deferral of the deductions can effectively reduce their taxes for the current and preceding tax year.
8. If a taxpayer is subject to alternative minimum tax (AMT) for a given tax year, they should seek to shift exclusions, particularly itemized deductions to a tax year where AMT will not be applicable.
9. Determine the opportunity cost/ benefit of utilizing the carryback allowance, as well as the tax benefit of forgoing the carryback of an net operating loss (NOL) for tax