Year-End Tax Planning in Uncertain Times

Year-End Tax Planning in Uncertain Times

Perry A. Shulman, CPA

Elizabeth Forspan, Esq.


There is always a certain degree of guesswork that goes into year-end tax planning.  This year, with the uncertainty surrounding what the tax code will actually look like after Washington completes the overhaul of our tax system, the guesswork is, to borrow a word from our President, HUGE.  The income tax rates for many individuals and businesses may decrease.  However, the definition of income subject to tax may change considerably as well.  Many itemized deductions that we have become so used to, such as the deduction for qualified medical expenses, state and local income taxes, real estate taxes and miscellaneous itemized deductions may be eliminated.  However, if the resulting new rules resembles the proposals put forth by the President, there will be a doubling of the standard deduction and the possible elimination of the controversial Alternative Minimum Tax.  Below are some tax-planning suggestions, which consider both the typical year-end planning techniques as well as planning for a potential overhaul:


  • Consider deferring the recognition of income from a higher tax rate year to a lower tax rate year.
  • Business expenditures and equipment purchases made in a higher tax rate year may result in greater tax savings than if made in a lower tax rate year.
  • Maximize the 2017 funding of an IRA, SEP IRA, 401(k) plan, Profit Sharing plan or Defined Benefit Plan contribution, if your 2017 tax rate will be higher than your 2018 rate and before the maximum contribution amounts may be reduced. A “Qualified Plan” (Profit Sharing plans, 401(k) plans and Defined Benefit Plans) established by an employer to provide retirement benefits for its employees and their beneficiaries must be established by December 31 or the end of the business’ fiscal year, of the year in which the contributions are to be deducted.  SEP IRA’s must be established by the employer’s tax filing deadline including extensions.
  • Consider pre-paying state and local income tax liabilities for 2017 before year-end so long as you are not subject to the Alternative Minimum Tax, as this deduction may be eliminated for payments made in 2018. This prepayment may be accomplished through employer payroll or retirement plan distribution withholding or through estimated income tax payments.
  • Consider pre-paying real estate tax liabilities before year-end so long as you are not subject to the Alternative Minimum Tax, as this deduction may be eliminated for payments made in 2018. Many real estate tax bills for the first half of 2018 have already been distributed.
  • Consider paying current itemized deductions and other expenses with a credit card prior to December 31. The expense may be deductible on your 2017 return while you may delay making the payment to the card issuer until 2018.
  • The current proposals will not allow for itemized deductions in 2018 of unreimbursed medical expenses in excess of the 10% of Adjusted Gross Income (“AGI”) limitation. Taxpayers should consider scheduling elective medical, vision, dental, and acupuncture procedures in 2017, enroll in stop smoking programs, purchase prescription glasses, and pay for these items prior to year-end.  Once the 10% limitation is met, health care bills may be deductible.  The above-mentioned credit card payment rule applies here as well.
  • Survivors of Hurricanes Harvey, Irma or Maria may be entitled to special tax relief including less restrictive casualty loss rules and access to retirement funds. In addition, taxpayers may also want to settle insurance or damage claims this year in order to maximize the 2017 casualty loss deduction.  This type of itemized deduction may be unavailable in future years.
  • IRA owners over the age of 70 ½ can explore making their charitable contributions directly from their IRA accounts to designated charities. Subject to limitations, the distribution will qualify towards the taxpayer’s annual required minimum distribution but is not included in their Adjusted Gross Income.  The advantage of using this method is that a lower AGI will result in lower AGI related computations.
  • The reduction of “net investment income” (unearned income) through deferral from 2017 to 2018 may result in the decrease of the 2017 net investment income tax (potential savings of an additional 3.8% on certain income).
  • Contributing appreciated securities held for more than one year directly to a charity is more efficient than selling the security and contributing the proceeds. The advantage of using this method is that a lower AGI (that does not include recognition of the gain on the sale) will result in lower AGI related computations.  Taxpayers get to deduct the fair market value of the security when contributed, subject to annual AGI limitations.  Contributions made in excess of the limitations may be carried forward to subsequent years.
  • Gifts made to individuals before year-end that are sheltered by the annual exclusion (currently $14,000 per donee) are not subject to gift taxes and will reduce the value of an estate. Gifts can be given to an unlimited number of individuals, which can significantly help reduce the size of your taxable estate for both state and federal estate taxes.  The annual exemption amount for 2018 will be increased to $15,000 per individual.


Perry A. Shulman, CPA is the Managing Partner of his highly respected East Rockaway Long Island based tax consulting practice.  He advises high-net-worth individuals, business owners and entrepreneurs in various areas including income and estate and trust planning and administration.  Mr. Shulman addresses professional organizations and has been quoted in various national news and professional publications.  Perry may be contacted at

Elizabeth Forspan, Esq. is the Managing Attorney of Ronald Fatoullah & Associates, a law firm that focuses on estate planning, elder care and Medicaid planning, guardianships, probate, estate litigation and taxation.  Elizabeth can be contacted at 1-877-ESTATES or



NY Managed Long Term Care Companies (MLTC) Are Killing Elders By Refusing Mandated Services.

NY Managed Long Term Care Companies (MLTC) Are Killing Elders By Refusing Mandated Services. – My Elder Advocate, LLC

The New York Legal Assistance Group has filed a federal class action lawsuit in the Eastern District of New York to challenge threatened and actual reductions in Medicaid-funded home care services. Named Plaintiffs and the class they seek to represent are people with disabling conditions who need home care services to remain safely in their homes and communities.


Federal Agency Ignores Judge’s Medicare Ruling To Detriment Of Countless Elders In Nursing Homes.

Jimmo v. Sebelius Settlement Agreement. 

For about 30 years, home health agencies and nursing homes that contract with Medicare have routinely terminated the Medicare coverage of a beneficiary who has stopped improving, even though nothing in the Medicare statute or its regulations says improvement is required for continued skilled care.

Medicare contractors have instead used a covert “rule of thumb” known as the “Improvement Standard” to illegally deny coverage to such patients. Once beneficiaries failed to show progress, contractors claimed they could deliver only “custodial care,” which Medicare does not cover.

This is a great travesty that has affected millions of elders who have been denied services that would have made great improvements in their health and welfare. Many thousands have died as a result of denial of services, and many more had to pay billions of dollars to get the services they should have received as part of their Medicare benefits.

Some basic definitions are in order to understand this post: 

“Improvement” Standard (also known as restorative or rehabilitative): 

The patient’s condition has the potential to improve or is improving in response to therapy; maximum improvement is yet to be attained; and, there is an expectation that the anticipated improvement is attainable in a reasonable and generally predictable period of time. 

“Maintenance” Standard: 

The skills of a therapist are necessary to maintain, prevent, or slow further deterioration of the patient’s functional status, and the services cannot be safely and effectively carried out by the beneficiary personally or with the assistance of non-therapists, including unskilled caregivers.

Jimmo and the Undying Myth of Medicare’s Improvement Standard 

The lawsuit stems from a bizarre practice that arose over decades because of Medicare’s fragmented and loosely administered process for handling beneficiary claims. The Medicare law and regulations state that coverage is available for health care and therapy that is “reasonable and necessary for the diagnosis or treatment of illness or injury.”

But at lower levels of Medicare’s review process, where a vast majority of decisions on coverage are made, some Medicare contractors — companies that review and pay medical claims for the government — terminated or refused coverage if there was no prospect of patient improvement or if there were signs that the patient’s condition was deteriorating.

Ask anyone and they will tell you the day you no longer show improvement is the day your Medicare benefits are cut off. Stories are legion; everyone has one. (My personal favorite involves a frail elderly woman asked to get up from her wheelchair each day and shuffle past a goal line of tape affixed to the floor.)

Unfortunately, everything “they” have been telling you about Medicare’s so-called improvement standard is false. As we will read, even after national attention this myth continues to persist, leading to confusion between providers, consumers, and agents.

Over five years ago, on January 18, 2011, a class action was filed in Vermont in order to correct what the plaintiffs alleged was erroneous, and widespread misinterpretation of the improvement standard. Joining lead plaintiff Glenda Jimmo were the Alzheimer’s Association, National Multiple Sclerosis Society, Paralyzed Veterans of America, Parkinson’s Action Network, and United Cerebral Palsy. The action was settled October 16, 2012, and approved January 24, 2013.


Unlike some class actions where multi-millions of dollars are awarded, the Jimmo settlement must’ve seemed rather tame. After all, it served mainly to clarify an existing policy. It was only possible because there never was an improvement standard, to begin with. Here is the exact text from the CMS Manual (published in December 2013, then revised in January 2014):

“Medicare has long recognized that even in situations where no improvement is possible, skilled care may nevertheless be needed for maintenance purposes (i.e., to prevent or slow a decline in condition). The Medicare statute and regulations have never supported the imposition of an “Improvement Standard” rule-of-thumb in determining whether skilled care is required to prevent or slow deterioration in a patient’s condition. Thus, such coverage depends not on the beneficiary’s restoration potential, but on whether skilled care is required, along with the underlying reasonableness and necessity of the services themselves.”

Examples of prohibited “rules of thumb” include lack of “restoration potential” or an individual being “stable” or “chronic”.

“Coverage depends upon an individualized assessment of the beneficiary’s medical condition and the reasonableness and necessity of the treatment, care, or services in question. Moreover, when the individualized assessment demonstrates that skilled care is, in fact, needed in order to safely and effectively maintain the beneficiary at his or her maximum practicable level of function, such care is covered (assuming all other applicable requirements are met). Conversely, coverage in this context would not be available in a situation where the beneficiary’s maintenance care needs can be addressed safely and effectively through the use of non-skilled personnel.”

Beyond agreeing to re-write its manual for improved clarity, the Centers for Medicare & Medicaid Services (CMS) also agreed to re-evaluate previously denied claims and to undergo a national carrier and provider education campaign. It is for this education campaign that we find Jimmo back in the news in 2016.

In fact, the original counsel found themselves back in court a few weeks ago, alleging that CMS has flat-out “refused” to clear up the confusion which exists within the long-term care provider community. They filed a motion to compel the government to adhere to the terms of the settlement. CMS insists they’ve completed the education campaign—which has been described as “failed”. The real world consequences are the continued failure of beneficiaries receiving skilled nursing and therapy services to which they’re entitled.

Judith Stein, executive director of the Center for Medicare Advocacy, says the evidence is clear: “Three years after the Jimmo Settlement we are still hearing daily about providers who never heard of the case and patients who can’t get necessary care based on an improvement standard… CMS could help, but has refused to provide any more education or written information.”

No matter what occurs in court, or how long it takes, we can begin our own education campaign right here, right now. Jimmo makes it clear that skilled care mustn’t be denied solely because an individual’s condition is chronic, stable or has plateaued. Furthermore, such care and therapy may be required solely to maintain one’s condition or to slow deterioration—not to restore or improve function.

Of course, such questions of eligibility should be kept in context. Which is to say, qualifying for Medicare benefits is one thing, but all other limitations, exclusions, and maximums still apply. One care provider asks us to think like this: maintenance care can be divided into “skilled maintenance” and “unskilled maintenance”. The former was finally clarified by the Jimmo Settlement, while the latter (long-term custodial care) has never been covered, and remains so.

“There are still many providers and contractors who do not know about, understand, or trust the change in the improvement policy,” CMA wrote in a December 2015 letter to APTA and other stakeholders. “We believe this is largely due to the fact that CMS’ Education Campaign was insufficient to make up for the rigor with which Medicare enforced the Improvement Standard—for decades.” According to CMA, CMS conducted only 1 briefing for providers and adjudicators, in early December of 2013. Since that time, CMS “has refused to do more,” CMA writes.

What is one to do? 

Contact an advocate or an elder law attorney.




Pharmacy Electronic Medical Records (PEMR) — Revolutionizing the Medical Profession

emrThe current medical reimbursement landscape is changing and is being heavily
influenced by a patient-centric model. The key: keep individuals healthy while not
needing to readmit them into hospitals. It is now a well-documented reality in modern
civilization that medication prolongs, and in many cases, saves lives. However, the sad
truth today is that roughly half of the prescriptions written in the United States go unfilled
every year, which leads to the inference that this rate is much higher in the developing
– Many patients are simply unaware that their medicine is due for a refill
– The pharmacy or physician never informs them
– Patient decides on an alternative medication therapy

As a result, all too many individuals go without potentially lifesaving medication on a
daily basis, and this is a tragedy of the system as it currently stands.
A report from the Robert Wood Johnson Foundation shows that “One in eight Medicare
patients were readmitted to the hospital within 30 days of being released after
surgery in 2010, while one in six patients returned to the hospital within a month of
leaving the hospital after receiving medical care. Patients were not significantly less
likely to be readmitted in 2010 than in 2008.” Furthermore, this report points out that
many readmissions can be avoided.

USNews and World Report stated in 2015 that “Half of U.S. Hospitals Face Medicare’s
Readmission Penalties” and that “Hospitals that readmit patients within a month of their
discharge face penalties under Medicare that cost them more than $400 million.”

This can all change with the rapid implementation of the pharmacy electronic medical records. Read more…