Jerry Dunn, CPA at Cochran Head Vick & Co., said, "Taxpayers that expect to have a gross estate under $5 million may assume that lifetime gifting is no longer important. As changes in recent years have shown, however, the estate tax rules are potentially subject to significant changes. Once a gift has been made and is no longer subject to being in contemplation of death, it can no longer be subjected to subsequent estate tax changes. Taxpayers should revisit lifetime gifting in light of the present, generous exemptions,"
The Act also states that the maximum gift tax rate for 2010 through 2012 is 35 percent. Some taxpayers may have made taxable gifts in 2010 in anticipation of the tax rate returning to a maximum 55 percent rate. With the exemption-equivalent amount increasing to $5 million for 2011 and 2012, these clients may be very disappointed that they made the gifts during 2010. Affected clients may wish to discuss with their attorney the possibility of using disclaimers and/or recessions to reverse otherwise taxable gifts made during 2010.
Cochran Head Vick & Co. is a certified public accounting firm, which conducts audit and accounting services, governmental accounting services, tax return preparation and tax planning services, payroll services and business valuation services in Kansas and Missouri. The firm was founded more than 35 years ago and has offices in Kansas City, Mo. Merriam, Kan., St. Joseph, Mo. and Kansas City, Kan. (www.chvcpa.com)