Tax / Valuation Update

Situation Overview

The fourth quarter of 2012 has started and we are now less than 90 days away from a potentially significant increase in estate and gift taxes. As you are well aware and stated simply, the current federal tax laws allow each person to gift up to a maximum of $5,120,000 before paying gift or estate taxes. As of January 1, 2013 the federal limits are slated to be reduced with a potential increase in the maximum estate and gift tax rate, as the current tax law sunsets and the pre-2001 tax law continues in its place.


There are two large arbitrage opportunities available for the rest of 2012 – 1) the amount of the unified credit is going to decline by just over 80% AND 2) the estate and gift tax rates are going to increase by about 70% per couple. For the remainder of 2012, a couple can together give away up to $10.24 million for the benefit of the next generation free of transfer tax. And gifts above that amount will only attract a 35% tax rate for the rest of 2012. The unified credit drops to $2 million per couple and the estate and gift tax rate rises to 55% (with a 60% "catch up rate" for estates between $10 million and $17.184 million) as of January 1, 2013.

Carleton McKenna Can Help

The opportunity to make substantial gifts has never been more acute particularly when the key asset is an interest in a hard-to-value closely held business, fractional property interest, Family Limited Partnership or Family Limited Liability Company. Carleton McKenna can help as we provide objective and comprehensive valuations for such complex engagements. Carleton McKenna’s senior-level involvement, internal review and quality control processes puts us in a unique position to meet your fourth quarter valuation needs in a timely, reliable, accurate and cost effective manner. Our transactional experience and industry expertise allow us to add substantial value in achieving the strategic and financial goals of our clients.

About Carleton McKenna & Co.

For more than thirty years, Carleton McKenna & Co. and its predecessor firms have been providing merger and acquisition advisory, capital raising and valuation services for small to mid-cap regional clients – both public and private – with expertise across a broad array of industries. For further information about Carleton McKenna & Co., please visit

If you would like more information about this transaction, please contact the following registered representatives*:

Paul H. Carleton
Christopher J. McKenna
Dominic M. Brault

*Securities placed through Financial America Securities, Inc., which is a member of FINRA/SIPC

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