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Playing the $13,000 Santa

December 24, 2009

In this season of frantic giving, don't forget the $13,000 per-donor, per-donee gift tax exclusion. Unless you have great confidence that you will die next year AND that Congress won't restore the estate tax retroactive to January 1, 2009, anybody who is a candidate for the estate tax should consider using the gift tax annual exclusion to get money out of the estate. A couple with four kids maximizing annual giving can reduce thier taxable estates by $520,000 over five years, not even counting appreciation of the gift.

If it's worth doing, it's worth doing right. To get the gift to count in 2009, here are some tips:

- If you're writing a check, march the lucky recipient down to the bank to cash it by December 31. Checks not cashed by year-end normally won't count as 2009 gifts.

- If you are donating private company stock, make sure the corporate secretary records the transfer on the company's books by year end. Also make sure the tax returns reflect the gift - if you make a December 25 gift of S corporation stock, make sure the donee gets a K-1 showing income for the 12/25 through 12/31 period.

- If you are donating public company stock, make sure it's in the donee's brokerage account before the end of the day December 31.

- If you are giving a disused sports facility, see your attorney; you can afford one.

Remember, if you miss the 2009 annual gifting exclusion, it's gone forever. 2009 isn't coming back.

Our 2009 year-end tax planning series concludes next week. See you then!

Tags: year-end tax planning.