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If you're self-employed, and your personal income is much higher one year than the previous years, can you distribute your reported taxable income to the previous years somehow in order to minimize your taxes?
Donald Trump did it, as I understand it: he subtracted the prior years' losses. However, my "losses" were mainly the opportunity cost of not having a regular salaried job.
Income averaging was generally available from 1964 to 1986. Since 1986, it can be used only by farmers and fishermen. https://www.irs.gov/pub/irs-soi/87inar.pdf mentions the repeal.
Income Averaging
Income averaging was repealed for 1987.
This IRS web page describes income averaging for farming: https://www.irs.gov/businesses/small-businesses-self-employed/farm-income-averaging-agriculture-tax-tips
If you are engaged in a farming business, you may be able to average all or some of your current year's farm income by shifting it to the 3 prior years (base years).
(Presumably there is a similar reference for fishing.)
Schedule J is used to elect income averaging. The instructions for schedule J are here: https://www.irs.gov/pub/irs-pdf/i1040sj.pdf
Use Schedule J (Form 1040) to elect to figure your 2017 income tax by averaging, over the previous 3 years (base years), all or part of your 2017 taxable income from your trade or business of farming or fishing. This election may give you a lower tax if your 2017 income from farming or fishing is high and your taxable income for one or more of the 3 prior years was low.
A farming business is the trade or business of cultivating land or raising or harvesting any agricultural or horticultural commodity.
A fishing business is the trade or business of fishing in which the fish harvested, either in whole or in part, are intended to enter commerce or enter commerce through sale, barter, or trade.
