The profession widely expects Congress to clarify that gifts which are tax-free when completed remain tax-free upon death. Still, "The potential for clawback is something clients should be aware of before undertaking a gifting strategy," Clark says. Advisors need to ensure the estate has liquidity to cover the tax if the recapture ultimately applies, she adds.

Estate Tax Portability For Recent Deaths
Under a new rule, married decedents who don't use their full $5 million gift-and-estate-tax exemption may pass the unused portion to their surviving spouse, who may then add it to his or her own exemption. Portability provides "a hedge against future appreciation in the surviving spouse's estate," says Terry Headley, president of Headley Financial Group in Omaha.

To benefit under current law, both spouses would have to perish in 2011 or 2012. "We don't know if portability will be extended," says Headley. To preserve the first-to-die's unused exemption in the event portability is extended, an estate tax return must be filed for the first death and an election made. The return is due within nine months of the death plus extensions, so the clock is ticking on 2011 passings.

Depreciation Deductions Gone Wild
For business owners, the Section 179 depreciation deduction remains at its highest level ever, according to CCH's Luscombe. As much as $500,000 of the total purchase price of all new and used equipment placed in service in 2011 can be deducted on this year's business tax return, rather than spread over the life of the assets. The Section 179 deduction phases out for businesses that buy more than $2 million of qualifying property this year.

But the real action is with 100% bonus depreciation, which likewise provides an instant deduction for an asset's entire cost. Only new property qualifies for bonus depreciation. But there is no limit on how much a business can buy and write off. Better still, the deduction can be used to create a net operating loss (whereas Section 179 expensing generally can't), which in turn can nab the client a refund of previously paid taxes or offset future years' income, says Filomeno's Tedone.

Come 2012, both Section 179 depreciation and bonus deprecation offer smaller savings.

Another tip for business clients: Self-employed individuals qualify for the 2% Social Security tax holiday salaried workers are enjoying this year. The break applies to the first $106,800 of net self-employment income and should be figured into estimated tax payments.

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