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Old 11-09-2017, 03:28 PM   #21
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The other problem is that it isn't flexable like recharacterizations are since using your example it is either $10,000 or $1,500 but if the OP needs a $3,000 reduction then it doesn't work.
You can elect to 179 $1800 of the $10,000. The balance ($8200) goes on your 7 year depreciation schedule. So then you would also get approx 15% of the $8200. So a total depreciation for 2017 of $1800 + $1230 or $3030. (You need to use the form, because the 15% is actually 14.7% or something, and sometimes there are adjustments for partial year stuff. But you can vary the amount that you claim on 179, and walk the AGI to the number you need. By purchasing a $10,000 piece of equipment that is eligible for depreciation, you know you will be able to adjust anywhere from around $1,500 to $10,000 in depreciation expense.

I do not buy machinery to get a tax deduction, I buy machinery that I use on the farm. I do adjust how much is placed on 179 or on a normal depreciation schedule to tweak my taxes. It isn't for everyone, but as the MBAs say- it is one of the levers I can pull.
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Old 11-09-2017, 04:44 PM   #22
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Thanks all for the excellent replies.

Thanks for staying on topic.

As for Section 179, that's the sort of out-of-the-box thinking that I was hoping to hear about. In my particular situation I can't make it apply to me, but it may be helpful to someone else.

Thanks especially to those who quoted the relevant portion of the proposed bill. I read it the same way, that a recharacterization in early 2018 of a 2017 conversion should be allowed, and since the applicable IRAs are at Vanguard I feel much safer with option A.

I'm also probably going to do a combination of C and D - try to get figure my AGI as closely as possible and do the conversion in December and convert a little more than my target, then do a t-IRA contribution to dial it in exactly.

In my case I have income this year that I have to figure out if it counts as earned income or not.

I agree also with whomever made the point about cliffs. ACA subsidy cliffs are one thing; in my case I am aiming for a zero EFC for FAFSA, which also has a cliff.

The tricky thing is that the bill is obviously going through changes and those changes may impact what I do over the next 8 weeks or so. And the consequences for being wrong are somewhat high I think, although I need to research that as well, since I would go into a zero-assets level test above the zero EFC AGI.

Thanks again all! (Continued comments welcome)
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Old 11-09-2017, 08:08 PM   #23
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You can contribute to IRAs until mid-April the following year. So you can fine tune AGI with IRA contributions after you know all your numbers.
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Old 11-09-2017, 09:57 PM   #24
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^^^^^ Deductible IRA contributions work only if you have earned income.... if you are fully retired you have no earned income so the above doesn't work.
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Old 11-09-2017, 11:03 PM   #25
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^^^^^ Deductible IRA contributions work only if you have earned income.... if you are fully retired you have no earned income so the above doesn't work.
Correct. One needs earned income.
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Old 12-02-2017, 10:51 PM   #26
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Followup if anyone actually cares.

I consulted with my CPA who basically said that he thought recharacterizations would be allowed in 2018 but he wouldn't count on it. He advised me to figure my AGI as best I can and then leave some margin since the cost/benefit ratio near a cliff is to be a few steps away from the edge. ;-)

I haven't done my conversion yet. I'm going to wait until the end of the month and all of my expected income has come in.

If I somehow screw up and end up over the cliff, I'll try a recharacterization. If that's not allowed, I'll just live with the consequences.
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Old 12-03-2017, 10:06 AM   #27
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Let's continue any further discussion in the new tax bill thread, here:

Tax Bills
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