Online Advisor
Timothy W. Tuttle & Associates

Volume 1 Edition 1           Please email comments to            December 2004

Dear Clients and Friends

A few last minute things to think about...

Donation of cars, boats, etc. to charity. The law changes dramatically for donations after December 31, 2004. Basically, your deduction would be limited to the price that the charity received for the item. If you plan to make this type of deduction, now is the time to do it.

Sale of residence acquired in tax free-exchange. This is a little zinger that was in one of the latest bills to become law. For sales of residences after October 22, 2004, if the residence had initially been acquired as rental property as part of a tax deferred exchange out of another rental property, you must now hold the property for at least 5 years to defer your gain as a sale of residence.

Establishment of pension plan for self employed persons. If you are self employed and plan to contribute to a pension plan for this year (other than an IRA or SEP-IRA) that plan must be established by December 31, 2004.

Gifts to Reduce Estate Tax. High net worth persons that will possibly be subject to the federal estate tax should be making annual gifts to reduce their taxable estates. For 2004, you may make gifts of up to $11,000 per person without incurring any gift tax or even any need to report the gift. A married couple could make $22,000 in gifts to as many people as they want. Additionally, each person has a "lifetime credit" of $1,000,000 that could be used for lifetime gifts, which might be advisable to remove property from the taxable estate where the gifted property will be appreciating. Finally, payments of tuition directly to a university and payments of medical expenses directly to a medical care provider don't count as gifts, and don't serve to reduce the $11,000 exclusion or the $1,000,000 lifetime credit.

That's It. Call if you have any questions.

If I don't speak to you prior to the end of the year, have a WONDERFUL holiday season.

Tim Tuttle

The information contained in this newsletter is of a general nature and should not be acted upon in your specific situation without further details and/or professional assistance. For more information on anything in ONLINE ADVISOR, or for assistance with any of your tax, business, or financial strategy concerns, contact our office.

Timothy W. Tuttle & Associates