January/February 2016 Tax Impact

An annual bonus plan can help attract, retain and motivate employees. And if the plan is designed carefully, the taxpayer can deduct bonuses earned this year even if he or she doesn’t pay them until next year. This article explains certain rules, such as the 2½ month rule and the all-events test. A sidebar discusses when it may be beneficial to change one’s accounting method.

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Those who own an interest in an S corporation, partnership or LLC should review the potential impact of the net investment income tax (NIIT). Why? Because there may be opportunities to reduce or even eliminate the tax. This article discusses how the tax works and offers some handy planning tips.

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A BDIT, also known as the “Beneficiary Defective Inheritor’s Trust,” is one of the most powerful estate tax and asset protection strategies available to taxpayers. Essentially, it’s a third-party settled trust designed to give the taxpayer control and beneficial enjoyment of the trust property. This article explains how a BDIT works and why it’s so important.

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This issue’s “Tax Tips” offers tidbits on expatriation and the “exit tax,” how to undo a Roth IRA conversion, and the nontaxability of identity protection services for some individuals.

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