Tax Planning Opportunities During Coronavirus

Two months ago if you’d told me that in a matter of weeks I’d be walking two miles each way to an ATM to deposit a check or walking a mile and a half round trip to the nearest post office box to put a letter in the mail, I would have questioned your sanity or asked you what planet you live on. But this is the reality of Coronavirus and the way ithas totally upended our daily lives. At the same time, on these treks to the ATM or the post office box I have connected with neighbors, Mt. Lebanon professional colleagues and potential clients whom I would nothave seen but for my walks. Of course, we always make sure to maintain a safe social distance duringthese impromptu catch-up sessions.

I have really enjoyed these interactions with fellow community members and they have reinforced my belief that connecting with friends, colleagues, and clients is particularly important during this period of social distancing. For our firm, this means finding methods of communication that can be used in place of in-person meetings. I’ve been reaching out to a number of clients by email, Facetime, telephone andeven social distance signings at their homes by viewing clients signing in their garages or on theirporches.

All of these discussions begin in a similar fashion with me asking the clients how they are doing andfeeling very reassured when they tell me that they are doing OK. No one is doing great, but we are allin this together trying to figure things out one day at a time. Once we check in with each other, sinceclients always want to make sure my family is doing OK too, they ask me what planning opportunitiesthat they should be considering right now.

Here are a few of the strategies I often recommend:

• Roth IRA Conversions – My wife, Beth, completed a Roth IRA conversion about a week and a half ago by making an in-kind transfer of all of the positions in her rollover IRA to her Roth IRA. She did not have to realize a loss by sellingpositions in her IRA, and she was able just to transfer the funds directly into theRoth IRA. This year clients will have additional opportunities to make larger RothIRA conversions because of the recently passed Coronavirus, Aid, Relief andEconomic Security Act or “CARES Act” (we only get acronyms like this fromCongress) waives the requirement for clients to take required minimumdistributions from qualified plans. This includes those that were inherited before 2020, whether they are inherited Roth IRAs or inherited traditional IRAs. If you are interested in utilizing this strategy this year, I recommend that you consult with one of the CPAs at Lange Accounting Group who can develop a Roth IRA conversion masterplan for you.

• Tax Loss Harvesting – With the volatility in the market, there are opportunities to recognize losses to offset remaining gains in equities, while buying a similar enough equity to get around the 30-day wash rules which prohibit you from buying back the same exact investment within 30 days. We recommend that you consult with your financial advisor on how you can best pursue this strategy.

• Charitable Giving – With the increased need in the community, the CARES Actallows those who can afford to do so to make cash contributions to public charitiesup to 100% of their adjusted gross income rather than 60%. Most of us do not have enough savings to be able to afford to do that. But the broader point is that we should consider charitable giving to the extent that we can afford to do so and perhaps even consider bunching (giving more than you normally would so that you can itemize the deductions and help the charities now).

I am confident that we will survive Coronavirus, and the economy will eventually get back on its feet. I also appreciate how difficult a time this is for all of us. At the same time, I encourage you to take advantage of these opportunities before the market really starts to recover.

Best wishes to all of you for what I hope is continued good health. I am looking forward to the time thatwe can meet again in person.

Best wishes,


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