Now’s the Time for Giving

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Source: PDI Global

For 2012, the gift and estate tax exemption is $5.12 million and the maximum gift and estate tax rate is 35%. Absent additional legislation, for 2013 the exemption will drop to $1 million and the top tax rate will increase to 55%. It’s difficult to predict what Congress will do between now and then, so consider making large gifts before year end to take advantage of the high exemption amount.

Even if Congress extends the current law, there are advantages to making gifts early, especially gifts of assets expected to appreciate. That’s because future appreciation is removed from your estate and sheltered from gift and estate taxes.

A caveat: If the exemption does fall back to $1 million in 2013, the IRS might attempt to “claw back” previous gifts in excess of $1 million and subject them to estate tax, even though they were exempt from gift taxes when made. Most experts believe this outcome is unlikely, but if it happens, you’ll be no worse off for having made the gift, and you may be better off if the assets appreciate after the gift is made.

About the Author

Keiter CPAs is a certified public accounting firm serving the audittax, accounting and consulting needs of businesses and their owners located in Richmond and across Virginia. We focus on serving emerging growth businesses and companies in the financial servicesconstructionreal estatemanufacturingretail & distribution industries and nonprofits. We also provide business valuations and forensic accounting servicesfamily office services, and inbound international services.

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The information contained within this article is provided for informational purposes only and is current as of the date published. Online readers are advised not to act upon this information without seeking the service of a professional accountant, as this article is not a substitute for obtaining accounting, tax, or financial advice from a professional accountant.


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