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Taxation

Schedule B

Schedule B is the portion of the federal income tax return where the taxpayer itemizes all interest and dividend income. The taxpayer attaches Schedule B to his or her Form 1040 when filing the return.

Schedule A

Schedule A is the portion of the federal income tax return where the taxpayer itemizes all income tax deductions, including charitable deductions. The taxpayer attaches Schedule A to his or her Form 1040 when filing the return.

Long Term Capital Gain

Long term capital gain is the capital gain realized on a sale of property that the seller has held for more than 12 months. Realized long term capital gain is subject to capital gains tax.

Transfer Tax

Transfer tax is the generic term applied to any tax that is assessed when assets are transferred from one individual to another. Federal transfer taxes include estate tax, gift tax, and generation skipping tax. State transfer taxes include death tax.

Threshold for 3% Deduction Reduction

Taxpayers who declare adjusted gross income in excess of a certain threshold must reduce their itemized deductions by 3% of that excess. Itemized deductions include state and local taxes, mortgage interest, and other itemized deductions, as well as charitable deductions. The reduction is limited to no more than 80% of the taxpayer's total itemized deductions.

3% Deduction Reduction Rule

Taxpayers who declare adjusted gross income in excess of a certain threshold must reduce their itemized deductions by 3% of that excess. Itemized deductions include state and local taxes, mortgage interest, and other itemized deductions, as well as charitable deductions. The reduction is limited to no more than 80% of the taxpayer's total itemized deductions.

Life Income Interest, Assignment of

An income beneficiary of a planned gift may assign to charity his or her right to future payments from the planned gift at any time. The present value of these future payments is the beneficiary's life income interest in the gift. The beneficiary of a charitable remainder trust or pooled income fund is eligible for a charitable income tax deduction equal to the value of his or her life income interest on the day the beneficiary assigns the interest to charity.

Technical Advice Memorandum (TAM)

A Technical Advice Memorandum (TAM) is a memorandum sent from the IRS National Office to IRS officials in response to a question of tax law, regulations, or rulings regarding a specific set of facts discovered on audit of a tax return. Only the taxpayer for which the TAM is issued may rely on its interpretation.

Overview of Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010

President Obama signed the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 into law on December 17, 2010. The Act contains a number of provisions that are of particular interest to gift planners. A summary of these provisions is below.

Overview of the Taxpayer Relief Act of 1997

The Taxpayer Relief Act of 1997 (H.R. 2014) was signed by President Clinton on August 5, 1997. The key provisions that we believe will affect gift and estate calculations are listed below.

(Editor's note: Many provisions of the Taxpayer Relief Act of 1997 were superceded by The Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA) and/or The Jobs and Growth Tax Relief and Reconciliation Act of 2003 (JGTRRA)).

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