Sol Schwartz & Associates, P.C. Certified Public Accountants

1. Sol Schwartz & Associates, P.C.Certified Public Accountants

2. 2011 YEAR END TAX PLANNING Presented by Jeff Jackson, CPA-PFS

3. OVERVIEW • Tried and True Strategies • Business Tax • Estate Tax

4. TRIED AND TRUE STRATEGIES • Income and deduction deferral or acceleration • Compare 2011 and 2012 to project savings • Compare 2011 and 2012 for deduction timing • Bunching of itemized deductions • Ordinary income tax rates for individuals currently are 10,15,25,28,33 and 35 percent; capital gains rates are zero and 15 percent

5. TRIED AND TRUE STRATEGIES (continued) • Capital Gains • Offset gains – only $3,000 of net losses offset ordinary income • Wash sale rules – be wary 61 days; 30 either way • Depreciation recapture

6. TRIED AND TRUE STRATEGIES (continued) • Installments sales • Future rates ?? Beyond 2012 not certain • Deduction Strategies • Credit card for charitable contributions • Appreciated stocks • Charitable contributions from IRA expires 2011; must be 70 1/2 or older; $100,000 limit; notify custodian; need trustee to charitable organization transfer; do not touch cash

7. TRIED AND TRUE STRATEGIES (continued) • Tax credits for home improvements • Expires after 2011 • Energy improvements; windows, air conditioning, heater; 10% of costs; maximum lifetime credit $500; prior cap $1,500 so be aware if taken in prior years

8. TRIED AND TRUE STRATEGIES (continued) • Miscellaneous • 0% tax rate on capital gains and qualified dividends; check applicability to parents and older children; Kiddie Tax may wipe out planning • Kiddie Tax • Children under 19 and dependent full-time student up to 24; unearned income in excess of $1,900 taxed at parents’ marginal rates; unearned income includes interest, dividends and capital gains • §529 alternative to outright gifts

9. TRIED AND TRUE STRATEGIES (continued) • Miscellaneous (continued) • Estimated Tax Payments • Review and increase to avoid penalty • Withholding on YE Bonus treated as if made ratably throughout year • State payments due 1/15/2012 pay by 12/31/2011 for additional deduction for 2011

10. TRIED AND TRUE STRATEGIES (continued) • Miscellaneous (continued) • Alternative Minimum Tax (AMT) • No indexing so more middle class and retirees are being subjected to AMT • High itemized deductions other than charitable contributions are the main culprits

11. TRIED AND TRUE STRATEGIES (continued) • Miscellaneous (continued) • Retirement Plans • Must be in place before year end exceptions are IRA and SEP • Limits for 2011 • 401(k) $16,500 ($22,500 for ages 50 and older) • IRA $5,000 ($6,000 for ages 50 and older) • SIMPLE IRA $11,500 ($14,000 for ages 50 and older) • Self-employment individuals 20% of SE income up to $49,000

12. TRIED AND TRUE STRATEGIES (continued) • Miscellaneous (continued) • Roth Conversions • Taxable on conversion; weigh tax rates current versus future • No income limitations for conversions

13. BUSINESS • Depreciation • §179 $500,000 for 2011 – $2 million limit before reduction; reverts to $125,000 for 2012 with no action, phase-out for assets in excess of $500,000 • No NOL creation (taxable income limit)

14. BUSINESS (continued) • Bonus Depreciation • 100% allowance for assets placed in service 9/8/10 through 12/31/2011; 50% allowance for assets placed in service after 12/31/11 and before 1/1/2013 • Must be new or first use property • MACRS recovery period of 20 years or less • Qualified leasehold improvement property reverts to 39 year after 12/31/2011 • Cost-segregation study to identify property that may be eligible for Bonus or at least accelerated depreciation • Corporate dividends by C Corps – 15% on dividends to pay out accumulated earnings

15. ESTATE TAX • $5,000,000 limit through 2011; $5,120,000 for decedents dying in 2012 (just announced 10/20/2011) • Review clients wills – double check to see if distributions still viable • Sunset to 2001 levels if no action • Strategies to utilize and maximize current levels • Family Limited Partnerships • Sales to Defective Trusts • GRATS • Discounts are still available • Gift Tax • Annual exclusion $13,000 per donee

16. CONCLUSION • Bush tax cuts sunset 12/31/2012 • Highest marginal tax rate increases from 35% to 39.6% • Capital Gains rate increases from 15% to 28% • Qualifying Dividends rate increases from 15% to 39.6% • Estate tax exemption drops to $1 million • Top estate tax rate increases to 55% • Section 179 expense election limit drops to $25,000

17. QUESTIONS

18. CONTACT INFORMATION Jeff Jackson, CPA-PFS Shareholder Sol Schwartz & Associates, P.C. 7550 IH-10 West, Suite 1200 San Antonio, Texas 78229 jbj@ssacpa.com www.ssacpa.com 210.384.8000 Ext. 144 As required by United States Treasury Regulations, you should be aware that any tax advice contained in the body of this presentation was not intended or written to be used, and cannot be used, by the recipient for the purposes of avoiding penalties that may be imposed under the Internal Revenue Code or applicable state or local tax law provisions. Como es requerido por las leyes del Departamento de Tesorería de los Estados Unidos, usted debe ser informado que cualquier asesoría fiscal contenida en este correo electronico no fue preparada, ni debe ser usada, por el usuario para propósitos de evitar multas y recargos que se puedan imponer por el Código Tributario del Internal Revenue Service (fisco) o por leyes tributarias estatales o locales.