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shares from his or her estate. If the for 2022). He and M could also elect
owner begins a gift-splitting to double this amount Contributor
current gifting program for the stock, per year per donee. J could effectively
the owner’s estate will be reduced by transfer a significant amount of value Trenda B. Hackett, CPA, is an executive
any future appreciation on the trans- out of his estate without incurring editor with Thomson Reuters Checkpoint.
ferred shares. If the owner has no any gift taxes. ■ For more information about this column,
present intention to retire, the owner contact thetaxadviser@aicpa.org.
could gift up to 49% of the voting
common stock without relinquishing
control of the corporation.
Personal Financial
Example 3. Recapitalizing a cor- Planning Section
poration and gifting stock to the
owner’s children: J is age 58 and is
the sole shareholder of W Inc. J is Tax Section
married and has two children. His
spouse, M, is a homemaker. His
daughter, Y, (age 30) has worked for
65+
W for seven years and would even-
tually like to take over the business
from her father. His son, D, an Aging clients
attorney with a successful practice,
has no desire to be involved in need you more
the business. than ever.

J is in good health and is unwilling
to commit to a retirement date. How- Will you step up to the challenge?
ever, he ultimately wants to transfer
the business to Y. His estate planning
goals are to provide for his spouse and
divide his wealth equally between his 65+ 5 1
son and daughter.
There are several alternatives for J population key areas professional
to consider. J can recapitalize the cor-
All baby boomers They need help with You can be their
poration with voting preferred stock
will be 65 or over tax, retirement, estate, primary point of
and nonvoting common stock. J keeps by 2030.* risk management and contact.
the voting preferred stock to retain investments.
control of the corporation, and Y re- *U.S. Census Bureau
ceives the nonvoting common stock,
which accumulates all of the future
appreciation in the company. Alter- Get started with free tools and resources at
aicpa.org/growadvisoryservices
natively, J can recapitalize with voting
and nonvoting common stock. Then J
can make gifts of voting stock to Y and
nonvoting stock to D.
The first step may be for J to adopt Founded by AICPA and CIMA, the Association of International Certified Professional Accountants
powers leaders in accounting and finance around the globe.
a lifetime gifting program to reduce © 2020 Association of International Certified Professional Accountants. All rights reserved. AICPA and
future appreciation in his estate. J American Institute of CPAs are trademarks of the American Institute of Certified Public Accountants
and are registered in the US, the EU and other countries. The Globe Design is a trademark owned by the
could make gifts to each child (and to Association of International Certified Professional Accountants and licensed to the AICPA. 2005-94624
his grandchildren) up to the annual
gift tax exclusion amount ($16,000

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