Making a Year End Gift Before Going Over the Fiscal Cliff

Making a Year End Gift Before Going Over the Fiscal Cliff

Just a reminder, for the rest of this year, every US citizen and permanent resident alien has a $5,120,000 gift tax exemption.  On January 1, 2013, regardless of who the president is, if Congress does nothing, then the gift tax exemption drops down to about $1,000,000.  (Technically I think it is $1,000,000 indexed for inflation back to 2001.)

So, if you are in the fortunate position of having extra money that you do not need to live on and you wish to leave that extra money to your children while minimizing the tax on such transfer, you should seriously consider making a substantial gift before the end of the year. 

Because it may not be to your advantage to give away certain property, especially highly appreciated property or business property that has been depreciated, I strongly suggest that you consult with a tax adviser before making any gift.