With a brief three months remaining in 2011 and a high degree of uncertainty surrounding any major tax changes, practitioners have begun stepping up the annual rite of year-end planning strategies for both their individual and business clients.

Though strategies and client situations may differ, tax experts strive to reduce client tax liabilities both for the current and following year, and therefore avoid unpleasant - and often expensive - surprises via tax underpayments.

We asked a number of veteran tax practitioners to weigh in with their top year-end planning strategies, as well as to highlight what they felt were among the most overlooked tax planning techniques.

"The fundamentals of effective tax planning are to defer taxable income and to accelerate deductible expenses and losses," explained George Farrah, executive editor, Tax and Accounting, at BNA. "This includes measures such as making your January mortgage payment in December or selling stocks for which you'll recognize a loss."

Farrah also emphasized maximizing the 2011 payroll holiday. "For 2011, individuals who have wages or self-employment income subject to the Social Security tax that can be accelerated, should do so to take advantage of the reduced payroll tax holiday rate," he said. "In 2011 only, employees and self-employed individuals pay just 4.2 percent Social Security taxes on wages and self-employment income up to $106,800, which is reduced by 2 percent. This is an incentive to accelerate such income to 2011, rather than recognizing it in the following year."

Farrah further suggested making lifetime gifts in excess of the annual exclusion amount, as the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 increased the gift tax exemption to $5 million for 2011 and 2012, providing a window of opportunity for large estates to make significant gifts without the imposition of tax.

"Lifetime transfers can be used to reduce the size of the donor's taxable estate and to shift income-producing assets to beneficiaries in lower income tax brackets," he said. "Due to the equivalent increase in the GST exemption to $5 million, even greater tax savings may be achieved by transfers to trusts in which all the beneficiaries are skip persons, with a corresponding allocation of GST exemption. If the GST exemption is sufficient to cover the entire trust, future distributions from the trust will not be subject to transfer tax."

STOCK AND SALES TAX DEDUCTIONS

Meanwhile, new business owners should consider the advantages of structuring as a C corporation that issues qualifying small-business stock.

Shareholders who acquired qualifying small-business stock after Sept. 27, 2010, and before Jan. 1, 2012, may exclude 100 percent of the gain on the stock, provided that the five-year holding period and certain other requirements are satisfied.

"Given that the current 15 percent highest capital gains rate is set to increase in 2013, the potential exclusion of 100 percent of the gain from qualifying small-business stock several years out, when the capital gains rate likely will be higher, is an important consideration in structuring an investment in a business entity," Farrah declared.

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