2011 Q4 A Year of Uncertainty?

2011 Q4 A Year of Uncertainty?

Officially, year-end tax planning is fairly straightforward in 2011. At year-end 2010, Congress extended many of the income tax laws that were in place at the time. Some laws were changed, especially in the estate planning area. For the most part, the tax law passed at the end of last year is effective for two years: 2011 and 2012. Therefore, you may expect to plan for year-end 2011 and for 2012 with some certainty. As this issue is written, however, the news from Washington is far from certain. President Obama and Congressional leaders are attempting to resolve federal budget and debt issues. Tax changes are possible, and such changes may affect year-end planning in 2011. Our office will keep you

2011 Q4 Estate and Gift Tax

2011 Q4 Estate and Gift Tax

 ❖The federal and estate gift tax exemptions are each set at $5 million for 2011 and 2012.  ❖This year, the federal gift tax exclusion is $13,000. Excess gifts have gift tax consequences.  ❖Suppose that Marge Jones, a widow, gives $300,000 to her daughter in 2011. The first $13,000 is covered by the annual exclusion.  ❖The remaining $287,000 reduces Marge’s estate tax exemption.  ❖Assume that Marge dies in 2012 and has made no other gifts over the annual exclusion amount.  ❖In this scenario, Marge’s estate would have an estate tax exemption of $4,713,000: $5,000,000 minus $287,000.    

2011 Q2 | Easing the Burden of Estate Tax

2011 Q2 | Easing the Burden of Estate Tax

The new tax law relieves many taxpayers from concerns about federal estate tax for the next two years. What’s more, the law clarifies the treatment of estates of the people who died last year. New rules For 2011 and 2012, the federal estate tax exemption is set at $5 million. That’s a significant increase over the $3.5 million exemption for deaths in 2009 and a huge jump from the $1 million exemption that would have taken effect if a new law had not been passed. Excess assets are now taxed at 35%, down from 45% in 2009. As before, bequests to charities and surviving spouses who are American citizens are not subject to estate tax, regardless of the amount. Perhaps

2010 Q4 | Planning During Uncertain Times

2010 Q4 | Planning During Uncertain Times

Some of the tax laws that were passed in the early years of this century will expire after 2010. Next year, prior law could take effect. Alternatively, Congress may pass new tax laws effective in 2011-or even some laws that are retroactive to the beginning of2010. Therefore, tax planning for year-end 2010 is unusually challenging. The articles in this issue of the CPA Client Tax Letter are based on current law, as of this writing. However, Congress may act by year-end, changing current law substantially. Therefore, our office will keep you posted to let you know what changes, if any, have been signed into law and how they might affect your personal tax planning. Income tax In 2010, six federal