Top 6 Interesting Tax Loopholes

11 Mar Top 6 Interesting Tax Loopholes

A list of some of the strangest gaps in the U.S. Tax code

Article referenced and/or accepts for full article Top 6 Weirdest Tax Loopholes | ThinkAdvisor. https://www.thinkadvisor.com/2015/03/09/top-6-weirdest-tax-loopholes

Court-side Deduction

Many alumni can’t get tickets to their alma mater’s home games unless they make a special “donation” to the university. Under current law, 80 percent of such contributions are deductible. The Obama administration has proposed closing the loophole to raise an estimated $2.5 billion over the next decade.

Fiscal Favoritism

Blind people are eligible for a higher standard deduction; the deaf or otherwise disabled don’t get special treatment. A songwriter who sells his music catalog pays a capital gains tax on the earnings. However, painters, photographers, writers, and other artists selling a body of work are subject to income taxes, which can be significantly higher.

Mixed (Car) Signals

Buyers of energy-efficient hybrid and electric cars are eligible for a federal tax credit of as much as $7,500. Yet the tax code also encourages businesses to buy gas-guzzling SUVs, vans, and pickup trucks by making it easier to depreciate the cost of a vehicle that weighs more than 6,000 pounds.

Artful Write-Off

Buyers of old master paintings or vintage Ferraris can enjoy their collections while getting a tax break: First, they set up a nonprofit museum that they control, then donate their collection. The museum should be open to the public only a few days a month.

A GREAT Dodge

The grantor-retained annuity trust allows individuals to place assets into a trust in exchange for an annuity payment. Any growth in the assets above the payment goes to their heirs tax-free. Casino owner Sheldon Adelson used GRATs to transfer at least $7.9 billion to his heirs from 2010 to 2013, avoiding a $2.8 billion bill.

The Value of an Education

If you withdraw money from a 529 savings plan without using it for education, you’ll pay a 10 percent penalty. However, that one-time levy is small compared with the cumulative drain of years of taxes on capital gains and dividends an ordinary investment sees, making the plans attractive for anyone.
As I was reading through a Bloomberg article on taxes, I found the above loopholes quite interesting. It is incredible how a sensible strategy impacts a person’s tax bill. However, we must understand that only some people own an Art Collection or Season Tickets at a university sports center. But nonetheless, great ideas to consider. The question looms: How many other exciting loopholes could the average family utilize to reduce their tax burden? I’m sure many of us had the time to comb through the endless pages of the Tax Code.

One loophole today may not be with a sinkhole tomorrow.

Simple steps to take. First, get rock solid advise from your accountant, attorney or financial advisor. Second, understand that your situation can be unique so don’t always take Uncle Bob’s advise.  Third, look at your overall estate planning strategy to see if tax strategies are cohesive with your goals. Last, remember my favorite saying, “One loophole today may not be with a sinkhole tomorrow.”

LBG Advisor, LLC and it’s advisor have posted this article intended for reading only and not financial or tax advise. We recommend that you consult a tax and legal professional to clarify your personal situation and tax profile. We are not responsible should an individual read this article and take personal action on what was read. This is for illustrative purposes only and should not be considered financial, tax or legal advise. Consult a professional to answer questions and your concerns.