1. GIFT TAX RETURNS Presented by: Robert S. Keebler, CPA, MST, AEP (Distinguished) 920 739 3345 robert.keebler@bakertilly.com robert.keebler@bakertilly.com 1

2. © 2009 Baker Tilly Virchow Krause, LLP All Rights Reserved. Robert S. Keebler, CPA, MST, AEP Robert.keebler@bakertilly.com Baker Tilly refers to Baker Tilly Virchow Krause, LLP an independently owned and managed member of Baker Tilly International Gift Tax > $13,000 Annual Exclusion (2010) > $1,000,000 Lifetime Gift Tax Exclusion (2010) > Top tax rate in 2010 – 35% 2

3. © 2009 Baker Tilly Virchow Krause, LLP All Rights Reserved. Robert S. Keebler, CPA, MST, AEP Robert.keebler@bakertilly.com Baker Tilly refers to Baker Tilly Virchow Krause, LLP an independently owned and managed member of Baker Tilly International Benefits of Gifting > Removes appreciation and future income from donor’s estate > Gift tax paid removed from donor’s estate if they live more than three years after gift 3

4. © 2009 Baker Tilly Virchow Krause, LLP All Rights Reserved. Robert S. Keebler, CPA, MST, AEP Robert.keebler@bakertilly.com Baker Tilly refers to Baker Tilly Virchow Krause, LLP an independently owned and managed member of Baker Tilly International Basis > Gifted Property – Carry Over Basis > Property Transferred at Death – Stepped Up Basis 4

5. © 2009 Baker Tilly Virchow Krause, LLP All Rights Reserved. Robert S. Keebler, CPA, MST, AEP Robert.keebler@bakertilly.com Baker Tilly refers to Baker Tilly Virchow Krause, LLP an independently owned and managed member of Baker Tilly International Availability of Annual Exclusion > Present Interest – Immediate use, possession, or enjoyment = Annual exclusion > Future Interest – donee does not have absolute right to the property at the present time = No annual exclusion 5

6. © 2009 Baker Tilly Virchow Krause, LLP All Rights Reserved. Robert S. Keebler, CPA, MST, AEP Robert.keebler@bakertilly.com Baker Tilly refers to Baker Tilly Virchow Krause, LLP an independently owned and managed member of Baker Tilly International Crummey Trusts > Annual Exclusion > Withdrawal Rights > Confirmation that Notices Sent Out 6

7. © 2009 Baker Tilly Virchow Krause, LLP All Rights Reserved. Robert S. Keebler, CPA, MST, AEP Robert.keebler@bakertilly.com Baker Tilly refers to Baker Tilly Virchow Krause, LLP an independently owned and managed member of Baker Tilly International 2503(c) Trusts > Annual Exclusion Available > The gifted property and the income from it may be expended by (or for the benefit of) the beneficiary before age 21; > Passes to beneficiary at age 21; and > If the minor dies before reaching age 21, trust will revert to the minor’s estate or will pass to the appointees of the beneficiary under a general power of appointment. > Can be extended beyond 21 7

8. © 2009 Baker Tilly Virchow Krause, LLP All Rights Reserved. Robert S. Keebler, CPA, MST, AEP Robert.keebler@bakertilly.com Baker Tilly refers to Baker Tilly Virchow Krause, LLP an independently owned and managed member of Baker Tilly International Deductions > Charitable Deduction > Marital Deduction 8

9. © 2009 Baker Tilly Virchow Krause, LLP All Rights Reserved. Robert S. Keebler, CPA, MST, AEP Robert.keebler@bakertilly.com Baker Tilly refers to Baker Tilly Virchow Krause, LLP an independently owned and managed member of Baker Tilly International Educational and Medical Expenses > Unlimited exclusion > Education – tuition > Medical – includes insurance premiums > Paid directly to education or medical facility 9

10. © 2009 Baker Tilly Virchow Krause, LLP All Rights Reserved. Robert S. Keebler, CPA, MST, AEP Robert.keebler@bakertilly.com Baker Tilly refers to Baker Tilly Virchow Krause, LLP an independently owned and managed member of Baker Tilly International Qualified State Tuition Program > Present interest > Used for higher education > Ratably over 5 years – Election on gift tax return 10

11. © 2009 Baker Tilly Virchow Krause, LLP All Rights Reserved. Robert S. Keebler, CPA, MST, AEP Robert.keebler@bakertilly.com Baker Tilly refers to Baker Tilly Virchow Krause, LLP an independently owned and managed member of Baker Tilly International Gift Splitting > Spousal Consent – Each spouse must sign the other spouse’s return – Mailed to IRS in same envelope > Community Property 11

12. © 2009 Baker Tilly Virchow Krause, LLP All Rights Reserved. Robert S. Keebler, CPA, MST, AEP Robert.keebler@bakertilly.com Baker Tilly refers to Baker Tilly Virchow Krause, LLP an independently owned and managed member of Baker Tilly International Valuation Discounts > Minority Interest Discount > Marketability Discount > Fractional Interest Discount > Gift Tax Return – Check box – Attach valuation report/fractional interest statement 12

13. © 2009 Baker Tilly Virchow Krause, LLP All Rights Reserved. Robert S. Keebler, CPA, MST, AEP Robert.keebler@bakertilly.com Baker Tilly refers to Baker Tilly Virchow Krause, LLP an independently owned and managed member of Baker Tilly International Generation Skipping Transfer (GST) Tax > Lifetime Exclusion > Top Rate – 45% (2009) & 0% (2010) > Skip Person – Person 2 or more generations below – Non-relative more than 37 ½ years younger – Certain trusts – all interests held by skip persons > Non-Skip Person 13

14. © 2009 Baker Tilly Virchow Krause, LLP All Rights Reserved. Robert S. Keebler, CPA, MST, AEP Robert.keebler@bakertilly.com Baker Tilly refers to Baker Tilly Virchow Krause, LLP an independently owned and managed member of Baker Tilly International Generation Skipping Transfer (GST) Tax > Annual Exclusion – Direct Skips 14

15. © 2009 Baker Tilly Virchow Krause, LLP All Rights Reserved. Robert S. Keebler, CPA, MST, AEP Robert.keebler@bakertilly.com Baker Tilly refers to Baker Tilly Virchow Krause, LLP an independently owned and managed member of Baker Tilly International Generation Skipping Transfer (GST) Tax > Automatic Allocation – GST Trust > Allocation of GST – Election into automatic allocation – Election out of automatic allocation 15

16. © 2009 Baker Tilly Virchow Krause, LLP All Rights Reserved. Robert S. Keebler, CPA, MST, AEP Robert.keebler@bakertilly.com Baker Tilly refers to Baker Tilly Virchow Krause, LLP an independently owned and managed member of Baker Tilly International Generation Skipping Transfer (GST) Tax > Non-GST Trusts – Part 1 > GST Trusts – Part 3 > Direct Skip Trusts – Part 2 16

17. © 2009 Baker Tilly Virchow Krause, LLP All Rights Reserved. Robert S. Keebler, CPA, MST, AEP Robert.keebler@bakertilly.com Baker Tilly refers to Baker Tilly Virchow Krause, LLP an independently owned and managed member of Baker Tilly International Gift Tax Return Due Date > April 15 > If taxpayer dies – No later than due date (with extensions) for estate tax return (if one is required) 17

18. © 2009 Baker Tilly Virchow Krause, LLP All Rights Reserved. Robert S. Keebler, CPA, MST, AEP Robert.keebler@bakertilly.com Baker Tilly refers to Baker Tilly Virchow Krause, LLP an independently owned and managed member of Baker Tilly International Extensions > Six-month extension > Income tax return > Form 8892 > Check box on return 18

19. © 2009 Baker Tilly Virchow Krause, LLP All Rights Reserved. Robert S. Keebler, CPA, MST, AEP Robert.keebler@bakertilly.com Baker Tilly refers to Baker Tilly Virchow Krause, LLP an independently owned and managed member of Baker Tilly International Where to File Department of the Treasury Internal Revenue Service Center Cincinnati, OH 45999 19