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.