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Tax Law FAQs

Am I only allowed to give my daughter $13,000 per year?
The $13,000 annual gift tax exemption is really not a limit at all; it’s simply one way you can pass assets without paying gift taxes.  The rule states that each calendar year, you may transfer $13,000 to as many individuals as you would like.  If you’re married, you and your spouse can transfer $26,000 to as many individuals as you would like, by splitting gifts.  No gift tax return is required.

You can transfer as many assets as you would like to your daughter.  In 2011 and 2012, you could transfer up to an additional $5,000,000 ($10,000,000, if you’re married) to your daughter and still not pay gift taxes, although you would need to file an informational gift tax return.

You can also pay your daughter’s (or anyone else’s) educational expenses directly to the provider and not incur gift tax.
Be sure to consult with a qualified tax attorney about your individual gifting situation.

Which type of business entity is simplest for tax purposes?
A sole proprietorship is the simplest form of business ownership and the taxes are the simplest; however, there are other factors besides taxes to consider when choosing a business entity. Important considerations include asset protection and day to day ease of functioning.  Consult with a qualified tax attorney or business attorney to help you choose and establish the business entity that is most appropriate for you.

Are my tax debts dischargeable in bankruptcy?
In extremely limited circumstances, tax debts are dischargeable in bankruptcy.  The general rule is that they are not.  Analysis of your individual case is required to give a specific answer.  See a tax attorney or bankruptcy attorney for good advice.

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