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Navigating Estate Plans Through Uncharted Waters

Uncertainty caused by the temporary federal estate tax repeal
The failure of Congress to preserve the federal estate and generation-skipping transfer (GSTT) taxes has created a challenging estate planning environment. The Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA) brought about the repeal of these transfer taxes for 2010, but the federal gift tax remains intact with a $1 million lifetime exemption and a top tax rate of 35 percent. Further, a modified carryover basis system replaces the long-standing step-up in basis rule promoting the income taxation of appreciated assets when these assets are sold by the estate's heirs. And, these changes are only temporary--in 2011, the estate and GST taxes are scheduled to return to their 2001 status (i.e., $1 million exemption and top rate of 55 pecent). On top of that, Congress could reinstate these taxes (retroactive to January 1 or otherwise) or enact an entirely new transfer tax regime, adding to the uncertainty currently surrounding estate planning. How should an estate planning professional proceed under these circumstances?

Estate tax planning vs. capital gains tax planning
As of January 1, 2010, federal estate and GST taxes are repealed, meaning that estates, in general, may transfer assets of any value without being subject to these taxes (although state death taxes may still be imposed, see below for further discussion). While dying in 2010 could mean the avoidance of transfer taxes, there is instead the potential imposition of federal capital gains tax on the sale of appreciated assets when they are sold by estate beneficiaries. Thus, for individuals who are very old, very ill, or terminally ill, immediate attention may be needed to steer an estate plan away from minimizing estate taxes and towards minimizing capital gains taxes.

Prior to 2010, in general, the basis of estate property was its fair market value on the date of the decedent's death. In 2010, the basis of estate property is the lesser of the asset's fair market value on the date of death or the decedent's (carryover) basis. For example, assume the decedent's basis in property is $2 million with a date-of-death fair market value of $4 million. Beneficiaries inheriting the property will receive it with the lower $2 million carryover basis. If the property is subsequently sold for $4 million, the beneficiary may realize a capital gain on the difference between the selling price ($4 million) and the carryover basis ($2 million).

However, two special basis adjustments may apply. The first adjustment allows estates to exempt up to $1.3 million of appreciation or gain on property that is passed to any beneficiary. The second adjustment allows estates to exempt up to $3 million of property that passes to a surviving spouse, or as "qualified terminable interest property" (QTIP). These exemptions are separate, so an exemption of $4.3 million can be applied towards property going to a surviving spouse (with nothing left over for property passing to other beneficiaries).

Example(s): Assume an unmarried decedent's estate consists of a farm worth $1.5 million with a basis of $500,000 ($1 million gain), and stock worth $1 million with a basis of $500,000 ($500,000 gain). The estate administrator may exempt up to $1.3 million of the total gain ($1.5 million). The exemption can be allocated to assets at the discretion of the executor, unless the decedent specifically directs otherwise in the will or trust. Thus, the entire $1 million gain from the farm can be exempted with the remaining exemption ($300,000) applied to the stock (leaving $200,000 of taxable gain). Or the entire gain from the stock can be exempted, with the exemption balance applied to the farm (leaving a capital gain of $200,000).

Tip: Determining a decedent's basis can be very important. Special attention must be paid to determining and documenting how and when assets are acquired or received, the acquisition cost, and any additional increases in basis.

Caution: There are other rules that may also affect the basis of property. For example, the decedent's basis in property can be increased by unused capital loss carryovers, net operating loss carryovers, and by Internal Revenue Code (IRC) Section 165 claims for theft losses and worthless securities, among other things. You may need to consult with a tax professional to understand all these issues.

How these exemptions are allocated among various estate assets will take careful consideration. Some questions to consider include:

  • What type of asset is it?
  • What is the basis of the property?
  • Do other adjustments need to be applied to the asset's basis?
  • Who is the intended beneficiary of the asset, and what is his or her tax bracket?
  • What is the intended use of the inherited asset, (i.e., is it expected to be sold or held)?
  • If the asset is a principal residence, is the federal income tax home sale exclusion ($250,000) available to reduce the gain from the sale?

Review plans for formula clauses
Many wills and trusts were drafted in contemplation of transfer taxes, so they contain provisions that allocate or direct the distribution of assets based on formulas or other directions in order to minimize these taxes. In particular, wills and trusts created for married couples frequently employ a formula to minimize potential federal estate tax by utilizing the federal estate tax exclusion amount of the first spouse to die. This is usually accomplished by dividing the estate of the deceased spouse into a marital trust for the benefit of the surviving spouse and a family trust (also referred to as a credit shelter trust or bypass trust) for the benefit of children. The family trust is funded up to the decedent's unused estate tax exclusion amount and the marital trust receives the balance of the estate. But if there is no estate tax in the year of death, how is such a provision to be interpreted? For example, if the document references funding of the family trust with an amount equal to the maximum that will pass free of estate tax (i.e., up to the applicable exclusion amount), if there is no estate tax, could this language be construed to mean that the entire estate passes to the family trust? If the surviving spouse is the beneficiary of both trusts, there may be no problem, but if the spouse has no right or access to assets in the family trust, then the surviving spouse could theoretically be left with nothing.

Similarly, for donors who are charitably inclined, estate planning documents may leave a percentage of the estate or a dollar amount to a charity out of that portion of the estate exceeding the applicable estate tax exclusion amount. Again, if there is no estate tax, it's conceivable that no gift will be made to the charity.

In light of these and other potential issues, it is best to review estate planning documents and make necessary revisions to accomplish the intent of the owner. Wills and trusts should be drafted to clearly reference what should happen if the owner dies when there is no estate tax, or if the exclusion amount is greater or less than the 2009 amount ($3.5 million). Thus, documents will need to provide flexibility in their distribution provisions to accommodate the possibility of many varied scenarios.

Gifting opportunities and issues caused by the repeal of the GST tax
The temporary repeal of the GSTT provides an opportunity to make gifts to skip beneficiaries free from the GSTT. In 2010, large gifts to grandchildren, subject to both the gift tax and the GSTT in prior years, now are subject only to the gift tax (at a 35 percent tax rate).

Creating and funding a dynasty trust for skip beneficiaries (i.e., grandchildren and younger generations) also may be a viable planning option that takes advantage of the temporary GSTT repeal. In addition, if the trust proceeds are used to provide for the beneficiary's education or health care, even if the GSTT is reintroduced, those distributions are not subject to the tax.

For those who have begun gifting through the use of dynasty or similar trusts, 2010 may be the time to accelerate trust distributions or terminate the trust altogether. The trust may allow the trustee discretion to make distributions to or for any of the trust beneficiaries. In general, the GSTT applies to taxable distributions to skip persons, and on taxable terminations resulting in a shift from one generation to the next. If the trust corpus exceeds the applicable GSTT exclusion amount ($3.5 million in 2009, $1 million in 2011), trust distributions or terminations may be subject to the GSTT. In 2010, unless the law changes, there is no GSTT to infringe on these transactions.

However, if the GSTT is imposed retroactively, gifts thought to have escaped the GSTT may be captured by it after all. This possibility must be weighed against the potential tax savings of gifting without the GSTT to determine the best course of action.

Testamentary gifts to skip beneficiaries may be based on the applicable GSTT exemption (gifts to skip beneficiaries up to the applicable GSTT exclusion amount, the remainder to children or other beneficiaries). For deaths in 2010, the repeal of the GSTT could result in the entire gift being made to skip beneficiaries with nothing to remainder beneficiaries. Documents may need to be amended to include a different formula to account for the possibility that there is no GSTT exemption when allocating gifts to grandchildren.

Addressing the impact of state death taxes
Prior to 2001, many states tied their death tax (sometimes called a credit estate tax, sponge tax, or pickup tax) to the federal state death tax credit. The passage of EGTRRA eventually replaced the state death tax credit with a deduction. Thus, states that coupled their death tax to the federal credit saw its elimination. Some states responded by simply linking their death tax to the federal credit that was in effect prior to 2001 ($675,000) or some other amount. Other states decoupled from the federal system altogether and enacted a separate inheritance or estate tax. And, those states that did nothing anticipate the potential reinstitution of their death tax in 2011 when the federal credit is scheduled to return. Planning for both federal and state transfer taxes (some states also have a gift tax and/or GSTT) has become extremely difficult and complex. Creative planning will be required.

This article was provided by Forefield and distributed by Lawrence Sprung.

Item’s Worth Noting

Special rules apply to charitable donations for Haiti relief efforts
If you make a qualified charitable contribution after January 11, 2010, and before March 1, 2010, for relief efforts associated with the January 12, 2010, earthquake in Haiti, you can treat the contribution as if it were made on December 31, 2009. As a result, if you itemize deductions on Form 1040, Schedule A, you can elect to claim the deduction for the Haitian relief contribution on your 2009 federal income tax return. To qualify, the contribution must be made in cash. To facilitate charitable donations made via text messages, a telephone bill showing the name of the organization, and the date and amount of the contribution, will satisfy charitable deduction recordkeeping requirements.

Time running out for first-time homebuyer's tax credit
If you're in the market for a new home and hope to take advantage of the first-time homebuyer tax credit, you'll need to purchase a principal residence before May 1, 2010 (or before July 1, 2010 if you enter into a written binding contract prior to May 1, 2010). If you--and your spouse, if you're married--did not own any other principal residence during the three-year period ending on the date of purchase, the credit is worth up to $8,000 ($4,000 if you're married and file separate returns). If you--and your spouse, if you're married--have maintained the same principal residence for at least five consecutive years in the eight-year period ending at the time you purchase a new principal residence, the credit is worth up to $6,500 ($3,250 if you're married and file separate returns).

The credit is reduced if your modified adjusted gross income (MAGI) exceeds $125,000 ($225,000 if married filing a joint return) and is completely eliminated if your MAGI reaches $145,000 ($245,000 if married filing a joint return). You can't claim the first-time homebuyer tax credit if the purchase price of your principal residence exceeds $800,000. Other limitations and provisions also apply.

President's proposed 2011 budget offers Congress multiple initiatives
The proposed 2011 budget submitted by President Obama offers multiple new initiatives, including several small business tax incentives, provisions intended to promote college affordability, and tax benefits targeting the middle class. The budget that ultimately emerges from Congress will likely differ significantly from that proposed by the President, but the proposed budget is valuable in that it provides a framework for discussion over the next few months. The proposed budget includes:

For businesses-- A new tax credit of $5,000 for each new hire made by an employer, a one-year extension of 2009 bonus depreciation and Section 179 expensing limits, and requirements for employers who do not offer retirement plans to implement automatic IRAs for employees
For students-- Expanded Pell Grant limits, a permanent American Opportunity tax credit, and a proposal to strengthen income-based repayment plans for student loans (overburdened borrowers would pay only 10% of discretionary income in loan payments and remaining debt would be forgiven after 20 years)
For individual taxpayers-- A return of the top two marginal tax rates to 39.6% and 36% in 2011, and an expanded 28% tax bracket; a permanent extension of the current 0% and 15% rates on long-term capital gain, with a new 20% rate for higher-income individuals; permanent extension of the federal estate tax and the alternative minimum tax (AMT) rules and exemption amounts, at 2009 levels

New credit card provisions now in effect
The Credit Card Accountability Responsibility and Disclosure (CARD) Act of 2009 included several provisions that became effective on February 22, 2010. Some of these changes could affect you:

Credit card companies are prohibited from increasing annual percentage rates (APRs) that apply to existing balances unless (1) the index on which the rate is based changes, (2) the APR was a promotional rate that has expired, (3) you failed to comply with a hardship workout plan, or (4) you're more than 60 days past due on the account; if an increase in APR is the result of you falling 60 days past due on the account, the rate will be restored to what it was before the increase if you make timely minimum payments for six months
If different APRs apply to separate portions of an outstanding balance, the amount of any payment beyond the minimum payment due must be applied to the portion of the balance with the highest APR
If you're under age 21, you won't be able to get credit unless you have a cosigner over age 21 or can demonstrate an ability to repay the debt
You can't be charged an over-the-limit fee unless you authorize the credit card company to complete the transaction that causes the balance to exceed your credit limit

The Great Turnaround

What the 1980 U.S.Men’s Olympic Hockey Team can teach us about late-stage retirement planning.

It was February of 1980, at Madison Square Gardens during the height of the Cold War. It was there, that the U.S. Men’s Olympic Hockey team took on what experts considered the world’s best hockey team at the time: The U.S.S.R. It was an exhibition match meant to be a preview of the upcoming Olympics and the U.S. was trounced, 10-3.

Fast forward ten days later and after being given no chance by critics and fans alike, the United States men’s team pulled one of the biggest sporting upsets of all time by defeating the U.S.S.R., 4-2. That team would then go on to win the Olympic Gold Medal and their story would become known as the “Miracle on Ice.” So how did they do it? How did they go from being given no chance to pulling off the inconceivable? Some say it was one of those perfect moments when miracles happen. Others point to something more solid: the preparation. The Russians spent their practice days before the medal round sitting around, studying plays, and generally relaxing. In general, they didn’t really prepare. The U.S. team practiced as hard as they ever had before. The coach looked for weaknesses and planned a winning strategy.

Their dramatic turnaround in such a short time is a solid example of two things: 1) It’s never too late to reach your goals, and 2) with the proper planning and strategy, you’re more likely to accomplish great things. This couldn’t be a better vision to have in your head if you’re nearing retirement and haven’t spent much time planning and saving for life after work. While not all investment stories end successfully, with just the right combination of perseverance, planning, and sacrifice, you may still be able to retire in relative comfort even if you got a late start in the game.

Your strategy and frame of mind are the keys when beginning to save for retirement later in the game. You can sit around like the U.S.S.R., resting and doing basic review, or you can prepare yourself mentally for the challenging, (but potentially rewarding) road ahead. When faced with the reality of catching up, you must also accept the fact that you may have to be more aggressive in your savings habits and your investments than some of your friends or co-workers who started saving long-ago. You no longer have the luxury of being as conservative later in life as you may like. You may also have to consider the possibility of working past age 65.

Most Americans who work today breeze past age 65. There’s a growing trend of people who love their jobs or just love to work. Realizing that you may have to work a bit longer is something you might have to consider at this stage. Now that you’ve sharpened your skates, and prepared mentally, it’s time to go out and play.

First things first. If you’re starting late in the game it’s extremely important to take advantage of the catch-up provision offered by 401(k)’s and IRAs. In order to catch up and still have a comfortable retirement, you’ll want to contribute the maximum amount to each, plus the extra amount you can add by law. This is known as the “catch-up provision.” If you’re 50 and older, the catch-up provision for 401(k)s in 2010 is $5500. IRAs allow you to contribute $1000 this year to catch-up. While it may seem difficult to contribute the maximum amount plus a catch-up, you have to ask yourself if you’d rather sacrifice now or worry a lot later. This helps you stay focused on your goal and every day needs of retirement. One of the biggest pieces of advice available today has to do with planning a budget and trying to play catch-up. You should list your retirement fund expenses first, as the most critical, before anything else and budget up from there.

Just playing catch-up isn’t the only way to save this late in the game for a successful retirement. One way to help (be more comfortable) later on in life is to reduce some of your heaviest debt right away. By reducing the amount you owe in credit card bills, car loans, or even your children’s extra college expenses, you ensure that when the time comes for you to retire, you do so knowing that your largest debts are behind you. This keeps you focused on the every day needs of retirement.

Finally, if you’re entering the retirement planning phase this late and you enjoy working, you might consider doing so a while longer. Besides the added financial benefit, you’re also contributing to your personal well-being both mentally and physically. You may even consider starting your own small business and making a bit of extra income while setting your own hours. After all, you’ve earned this freedom; shouldn’t you be taking advantage of it?

There is always something you can do to save for retirement, even if you think it’s too late. While the 1980 U.S. Men’s Olympic Hockey team may have been called the “Miracle on Ice,” planning for retirement this late in your life doesn’t take a miracle. But it does take a certain amount of self-sacrifice, some elbow grease, and some trusted planning from a financial professional. These are just a few of the basic ways to be prepared for retirement this late in the game. It won’t always be an easy path to retirement savings but with the right combination of hard work and trusted planning, you may find yourself with more time to enjoy life after work.


Written by: Securities America, Inc. Distributed by: Lawrence D. Sprung.

Funding Your Buy-Sell Agreement

Introduction
There are two major strategies that can be used for funding a buy-sell agreement. One strategy is to fund the buy-sell agreement with insurance policies. The second strategy is to fund the buy-sell agreement with tools other than insurance. Each of these funding strategies has merits and drawbacks. Some methods are more convenient for the buyer, while others may be better for the seller. The specific type of buy-sell agreement is an important consideration in the funding decision. Funding can be accomplished using more than one method. Whatever funding method (or combination) is chosen should be specified in the buy-sell agreement.

Insured funding options
Under the insured funding options, the two major types of insurance are:

  • Life insurance
  • Disability insurance

Noninsured funding options

The methods of funding a buy-sell agreement that do not use insurance policies include:

  • Cash
  • Borrowings
  • Installment payments
  • Private annuity
  • Stock redemption
  • Sale-leaseback
  • Appreciated property bailout
  • Deferred compensation

Why worry about funding at all?
It may be tempting to ignore funding when your buy-sell agreement is being established, because the triggering events are perceived as being far off in the future. Without advance funding arrangements, there is a risk that the sale of your interest could be delayed, or even worse, you or your estate may never get the money. This is especially critical if the reason you set up your buy-sell agreement was to provide your estate with liquidity. The use of prearranged funding can help to eliminate any potential uncertainty that could come up at the time of the actual transaction.

Factors in the funding decision
Factors that will generally influence the choice of funding method include business structure, size, and tax bracket; number of owners, their ages, tax brackets, and ownership percentages; levels of cash or credit available to the business or the owners; and type of buy-sell agreement. Depending upon the specific details, there might be just one funding method that is appropriate, or there may be several funding methods that could be used. Important considerations in choosing a funding method for the buy-sell agreement may include:

Cost of implementation
These would include interest costs, opportunity costs, and any legal and setup fees. The general interest rate levels affect the cost and attractiveness of borrowing at any point in time. Cash that is being held in a sinking fund may cause the company to miss out on a more profitable business investment or expansion opportunity. Legal and setup fees can arise from the use of trustees or special funding accounts. Some funding methods require an immediate outlay of cash, such as an initial deposit or premium payment, while others do not need a payment until the time of the transaction.

Time frame for funding
The time frame is the big unknown factor under a buy-sell agreement. There could be many years to accumulate the money for the purchase of a business interest, or it could be needed next week. If retirement is a triggering event, the time frame might be somewhat more predictable, but a death or disability can happen at almost any time.

Tax consequences
Generally, when a company buys back the stock of an individual shareholder, the payment is not tax deductible. It is possible, however, to structure the buy-sell funding so that some (or all) of the payments for a shareholder's stock are tax deductible. This may be possible when borrowings, deferred compensation, or sale-leasebacks are used. From the seller's point of view, installment payments or private annuities may allow gain from the sale of the business interest to be spread out over a period of time. Some methods might lead to unintended estate or gift tax consequences. In the case of a family corporation, the seller could have difficulty receiving favorable tax treatment for the sale of stock to the corporation itself.

If the business is a corporation, both the business entity and the individual owners may be subject to tax on corporate profits--the corporation when the profits are earned, and the shareholders if the profits are distributed as dividends. When the owners (or an outside individual) are in a lower tax bracket than the business itself, it may make sense for the individuals to buy the business interest. Sometimes, it is less expensive for the business to pay for the purchase of a business interest. The difference in tax rates between the business and the owners should be considered when deciding on the form of buy-sell agreement and the funding method. When a company attempts to accumulate cash for a buy-sell transaction before a shareholder has died, it could be faced with the accumulated earnings tax. If life insurance is used, the company could be exposed to the alternative minimum tax if the proceeds are paid to the company.

Risk of failure of funding method
Ideally, parties to the buy-sell agreement want to minimize the risk that the funding method will fail to provide the cash when needed. Some funding methods, such as cash reserves, or the cash value buildup in a life insurance policy, may be subject to claims from creditors and therefore may not be available to fund the buy-sell agreement at the appropriate time.

Disparity in ages, ownership, health, or income of owners
Wide differences in the age, ownership levels, health, or income of the owners can affect the choice of funding. Often, the owner with the largest share is also the oldest. In a cross purchase, the younger owners, with presumably lower incomes, are purchasing a larger interest and must come up with more money to fulfill their obligations under the agreement. An older owner in poor health may be more difficult to insure (or be uninsurable) and could cause a triggering event sooner than a younger owner. See Alternatives for the Uninsurable for more information.

When should funding be established?
Some funding methods require action at the time of execution of the buy-sell agreement. In all cases, it is better if funding is established immediately. The value of the business interests and the corresponding liability of the buyer could increase over time due to real growth and inflation. Full funding from the start can help your plan to keep up with inflation and growth. You should periodically review the buy-sell agreement to determine whether the funding method is keeping pace with the value of the business interest.

How much funding
Ideally, the buy-sell agreement should be fully funded from the beginning. In other words, the full purchase price should be covered under the funding arrangement. But remember, even partial funding is better than no funding. If it is impossible to fully fund the entire value of a shareholder's interest, you can combine multiple methods, such as a cash down payment with borrowings or installment payments to cover the balance. You can also combine the use of insurance with noninsurance methods.

The consequences of not funding the agreement
Let's say you have drafted the greatest buy-sell agreement in the business world. Business is a little slow right now, though, so you and your co-owners decide to wait a little while to fund the agreement. Some years pass, and business improves; in fact, it is so good that you and your co-owners do not have time for much else beside filling the tidal wave of orders that keeps pouring in. You are so busy and focused on the incredible pace of your business that you forget your own name, never mind the buy-sell funding you put off. In all this excitement, you die. Your family turns to the buyer under your buy-sell agreement, expecting a quick sale of your business interest so that your estate expenses can be settled. But guess what? There isn't any money for the purchase of your interest, because the funding was not established. Your buyer has no money, so neither does your family. Your family can take the buyer to court to enforce the agreement, but this could take a lot of time, and your estate taxes are due soon. And the whole situation could have been avoided by setting up the funding at the same time as the agreement.


This article was provided by Forefield and distributed by Lawrence Sprung.

Tax Planning for Income

What is tax planning for income?
Tax planning for income usually involves strategies for minimizing your taxable income. In particular, the timing and the method by which your income is reported become paramount. Effective planning begins with an understanding of the various types of income. Next, you'll want to consider tools for creating tax-free income, methods of sheltering earned income from taxes, strategies to defer taxes (and other tax-advantaged strategies), and vehicles for shifting income and tax. For older taxpayers, it's also useful to know how to minimize taxation of your Social Security benefits.

Why is it important for you to understand the concept of income?
As a general rule, you are required to pay tax on your income from whatever source derived, unless a statutory exception applies. Therefore, it's important for you to know which items are included and excluded from the IRS's definition of gross income. Additionally, income can be taxed at different rates, depending on whether the income is ordinary or derived from the sale or exchange of certain classes of property held for certain minimum time periods. Because losses can sometimes be used to offset income, it's also important to understand the concept of active versus passive income.

Why is it important to know how to generate tax-free income?
Although income is usually taxable, there are a number of vehicles that can produce tax-free or nontaxable income. You may be able to enjoy some portion of your income, tax free, by switching some of your investment money to these vehicles. Several useful vehicles exist, including Roth IRAs, tax-exempt bonds, and qualified small business stock.

How can you shelter earned income from taxes?
Sheltering your earned income involves employing one or more tools to generate losses, deductions or credits that will reduce the current federal tax burden on your earned income. Typically, your desired result is income deferral. Several methods exist to shelter earned income from taxes, including traditional deductible IRAs and employer-sponsored retirement plans.

Why should you be aware of strategies to defer taxes?
There are several reasons why deferring the taxation of income is generally desirable. First, deferring taxes will provide you with more money right now to fund various financial plans. Moreover, certain qualified retirement plans allow you not only to defer some of your current taxable income, but also let your retirement savings grow tax-free until a distribution is taken.
As a general rule, when tax rates are stable, it's wise for you to defer the recognition of as much income as possible to a later year and accelerate deductions. This will allow you to minimize your current income tax liability. As a consequence, you will be able to invest money that would otherwise have been used to pay income taxes, keeping that money working for you. When you eventually recognize the income, it's possible that you'll be in a lower tax bracket.

What are some other tax-advantaged strategies?
Many other tax-advantaged strategies exist. For instance, you should be aware of tax shelters and tools for creating passive income in order to take advantage of passive losses. Additional strategies that may help you reduce your overall income tax burden include taking advantage of the tax benefits of generating capital gains, investing in real estate, receiving annuitized payments, and engaging in year-end tax planning.

How can you shift income and tax to others?
Income shifting refers to dividing income among two or more taxpayers in a way that lowers overall taxes. Typically, income is shifted from higher bracket taxpayers to lower ones. If you're interested in income shifting, you should be aware of a number of topics, including the kiddie tax, the tax treatment of below-market and interest-free loans, and the benefits of making gifts of income producing property and employing family members.

What about Social Security benefits?
If you're an older taxpayer, you should probably be concerned with minimizing the taxation of your Social Security retirement benefits. Certain techniques exist to limit the taxation of such benefits, including filing your income tax return jointly and employing tools to reduce your modified adjusted gross income.

This article was provided by Forefield and distributed by Lawrence Sprung.

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