GIFT TAX RETURNS

GIFT TAX RETURNSPresented by:

Robert S. Keebler, CPA, MST, AEP (Distinguished)920 739 3345

[email protected]

1

mailto:[email protected]

© 2009 Baker Tilly Virchow Krause, LLPAll Rights Reserved.Robert S. Keebler, CPA, MST, [email protected] Tilly refers to Baker Tilly Virchow Krause, LLP an independently owned and managed member of Baker Tilly International

Gift Tax

> $13,000 Annual Exclusion (2010)

> $1,000,000 Lifetime Gift Tax Exclusion (2010)

> Top tax rate in 2010 – 35%

2


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

3


Basis

> Gifted Property – Carry Over Basis

> Property Transferred at Death – Stepped Up Basis

4


Availability of AnnualExclusion

> 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

5


Crummey Trusts

> Annual Exclusion

> Withdrawal Rights

> Confirmation that Notices Sent Out

6


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

7


Deductions

> Charitable Deduction

> Marital Deduction

8


Educational and MedicalExpenses

> Unlimited exclusion> Education – tuition> Medical – includes insurance premiums> Paid directly to education or medical

facility

9


Qualified State TuitionProgram

> Present interest> Used for higher education> Ratably over 5 years

– Election on gift tax return

10


Gift Splitting

> Spousal Consent– Each spouse must sign the other spouse’s

return– Mailed to IRS in same envelope

> Community Property

11


Valuation Discounts

> Minority Interest Discount> Marketability Discount> Fractional Interest Discount> Gift Tax Return

– Check box– Attach valuation report/fractional interest

statement

12


Generation SkippingTransfer (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

13



> Annual Exclusion– Direct Skips

14



> Automatic Allocation– GST Trust

> Allocation of GST– Election into automatic allocation– Election out of automatic allocation

15



> Non-GST Trusts – Part 1

> GST Trusts – Part 3

> Direct Skip Trusts – Part 2

16


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)

17


Extensions

> Six-month extension> Income tax return> Form 8892> Check box on return

18


Where to File

Department of the TreasuryInternal Revenue Service CenterCincinnati, OH 45999

19

Documents

GIFT TAX RETURNS