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GIFT TAX RETURNS

GIFT TAX RETURNS. Presented by: Robert S. Keebler, CPA, MST, AEP (Distinguished) 920 739 3345 robert.keebler@bakertilly.com. Gift Tax. $13,000 Annual Exclusion (2010) $1,000,000 Lifetime Gift Tax Exclusion (2010) Top tax rate in 2010 – 35%. Benefits of Gifting.

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GIFT TAX RETURNS

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  1. GIFT TAX RETURNS Presented by:Robert S. Keebler, CPA, MST, AEP (Distinguished)920 739 3345robert.keebler@bakertilly.com

  2. Gift Tax $13,000 Annual Exclusion (2010) $1,000,000 Lifetime Gift Tax Exclusion (2010) Top tax rate in 2010 – 35%

  3. Benefits of Gifting • Removes appreciation and future income from donor’s estate • Gift tax paid removed from donor’s estate if they live more than three years after gift

  4. Basis • Gifted Property – Carry Over Basis • Property Transferred at Death – Stepped Up Basis

  5. Availability of Annual Exclusion • Present Interest – Immediate use, possession, or enjoyment = Annual exclusion • Future Interest – donee does not have absolute right to the property at the present time = No annual exclusion

  6. Crummey Trusts • Annual Exclusion • Withdrawal Rights • Confirmation that Notices Sent Out

  7. 2503(c) Trusts • Annual Exclusion Available • The gifted property and the income from it may be expended by (or for the benefit of) the beneficiary before age 21; • Passes to beneficiary at age 21; and • If the minor dies before reaching age 21, trust will revert to the minor’s estate or will pass to the appointees of the beneficiary under a general power of appointment. • Can be extended beyond 21

  8. Deductions • Charitable Deduction • Marital Deduction

  9. Educational and Medical Expenses • Unlimited exclusion • Education – tuition • Medical – includes insurance premiums • Paid directly to education or medical facility

  10. Qualified State Tuition Program • Present interest • Used for higher education • Ratably over 5 years • Election on gift tax return

  11. Gift Splitting • Spousal Consent • Each spouse must sign the other spouse’s return • Mailed to IRS in same envelope • Community Property

  12. Valuation Discounts • Minority Interest Discount • Marketability Discount • Fractional Interest Discount • Gift Tax Return • Check box • Attach valuation report/fractional interest statement

  13. Generation Skipping Transfer (GST) Tax • Lifetime Exclusion • Top Rate – 45% (2009) & 0% (2010) • Skip Person • Person 2 or more generations below • Non-relative more than 37 ½ years younger • Certain trusts – all interests held by skip persons • Non-Skip Person

  14. Generation Skipping Transfer (GST) Tax • Annual Exclusion • Direct Skips

  15. Generation Skipping Transfer (GST) Tax • Automatic Allocation • GST Trust • Allocation of GST • Election into automatic allocation • Election out of automatic allocation

  16. Generation Skipping Transfer (GST) Tax • Non-GST Trusts – Part 1 • GST Trusts – Part 3 • Direct Skip Trusts – Part 2

  17. Gift Tax Return Due Date • April 15 • If taxpayer dies • No later than due date (with extensions) for estate tax return (if one is required)

  18. Extensions • Six-month extension • Income tax return • Form 8892 • Check box on return

  19. Where to File Department of the Treasury Internal Revenue Service Center Cincinnati, OH 45999

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