Tax Strategies Most CPAs Don't Recommend
Some are skipped because the engagement was never scoped for them. Others are skipped for good reason.
Most CPAs are engaged to prepare returns, not to design tax positions. A return preparation engagement is scoped to report last year accurately and on time, which is a backward-looking exercise. Several entirely legitimate strategies require a decision to be made before the year ends, so they fall outside that scope by construction rather than by judgment.
The Structural Reason, Not a Conspiracy
This is not about competence or willingness. It is about scope and timing. A preparer receives the year's records after the year has closed and reports what happened. By then, the retirement plan was either installed or it was not, the PTET election was either made or missed, the equipment was either placed in service or it was not.
Compounding this, most preparers are paid per return and are capacity-bound between January and April. Planning work requires modeling in the third quarter, which is a different service with a different economic model. Firms that do not sell that service do not staff for it.
Legitimate and Routinely Missed
Cash balance plans. The largest deduction available to most profitable owners, and the one least often raised, because it requires an actuary, a plan document, and a decision before an installation deadline. A preparer has no natural moment to introduce it.
Form 3115 depreciation catch-up. Missed depreciation from prior years can be claimed in the current year through an accounting method change, with no amended returns required. It is a well-established procedure that goes unused because nobody reviewed the fixed asset schedule against what should have been claimed.
The PTET election. Available in most states, worth real money to anyone in a high-tax state, and frequently missed because it is a separate election with its own deadline and estimated payment rules.
Cost segregation on modest properties. Widely assumed to be worthwhile only above several million dollars of basis. At current study pricing the economics work well below that, particularly with 100 percent bonus depreciation permanent.
Accountable plans. A short written policy that converts otherwise non-deductible owner expenses into deductible reimbursements. Cheap, durable, and routinely absent.
The Augusta rule. Section 280A(g) permits renting a personal residence to the business for up to fourteen days a year without the rental income being taxable. It requires genuine business use, documented meetings, and a defensible market rate, which is why it is skipped, but it is legitimate when done properly.
Skipped for Good Reason
Not everything absent from your return is an oversight. Several arrangements marketed to profitable owners deserve exactly the skepticism they get:
- Syndicated conservation easements. Listed transactions with sustained IRS enforcement and penalty exposure that outlives the disallowed deduction.
- Promoted micro-captives. A genuine captive insuring genuine risk is legitimate. A captive sold primarily as a deduction has repeatedly failed in court and carries disclosure obligations.
- Aggressive management fee arrangements. Fees between related entities must reflect real services at arm's length rates. Fees set to move income rather than to pay for work do not survive examination.
- Charitable remainder structures sold as tax plays. Sound for genuine charitable intent, poor economics when the deduction is the motive.
How to Tell the Difference
Four questions separate the two lists reliably:
- Would this arrangement make economic sense if the tax benefit disappeared? A cash balance plan still funds a retirement. A syndicated easement does not survive the question.
- Is it a specific, identifiable provision, or a structure assembled to produce a result the code does not directly provide?
- Is it a listed or reportable transaction? That status is published, and it is a definitive answer.
- Who is paid, and how? A strategy sold by the party earning a commission on the product deserves independent review before it is implemented.
Key Takeaways
- Strategies get missed because return preparation is scoped backward, not because of incompetence.
- Cash balance plans, Form 3115 catch-ups, and PTET elections are the most commonly missed legitimate moves.
- Listed transactions such as syndicated easements are skipped for sound reasons.
- If an arrangement makes no economic sense without its deduction, hold it to a much higher standard.
- Always ask who is being paid and how before implementing a strategy that was sold to you.
Start With the Pillar Guide
Frequently Asked Questions
Why didn't my CPA tell me about a cash balance plan?
Most commonly because the engagement was scoped to prepare returns, and the plan requires an actuarial study and installation before a deadline that falls long before filing. It is a planning service rather than a compliance one, and firms that do not sell planning do not staff for it.
Is the Augusta rule legitimate?
Yes. Section 280A(g) allows a personal residence to be rented for up to fourteen days a year without the rental income being taxable. It requires genuine business use, contemporaneous documentation of what occurred, and a market rate supported by comparable local rates. Undocumented use of it does not survive examination.
Should I be worried about aggressive strategies on my return?
Worth reviewing, particularly anything involving conservation easements, captive insurance, or offshore entities. Reportable and listed transaction status is published by the IRS, and disclosure obligations attach independently of whether the deduction survives.
Can I claim missed depreciation from prior years?
Generally yes, through a Form 3115 accounting method change, which allows the cumulative catch-up to be claimed in the current year without amending prior returns. This is a common route to recovering value from a cost segregation study on a property acquired several years ago.
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