Tax Action Strategy:  Determine Which Property To Gift

·      Take into account both estate and income tax consequences
and the economic aspects of any gifts you’d like to make.

·      To minimize estate taxes, gift property with the greatest future
appreciation potential.

·      To minimize income taxes, gift property that hasn’t appreciated
significantly since you’ve owned it, because your basis in the property
generally carries over to the recipient, who will owe taxes on any gain
when he or she sells it.

·      While the estate tax is in effect, it may make sense to wait to transfer
highly appreciated assets until your death, because the basis will be
stepped up and the capital gains tax can be avoided.

·      For property that has declined in value, your best bet is to sell the
property to take advantage of the tax loss. You may then gift the
sale proceeds.