The Wealth Counsellor

Welcome to the first Spring edition of the Wealth Counsellor. A lot has happened since our last publication. Egyptians voters approved a new constitution while protests sweep across the Middle East and northern Africa; heroes are being made in Japan as it works to rebuild after being shaken by an earthquake over ten times stronger than the one that devastated Haiti; and Donald Trump is considering presidential candidacy in 2012.

In this issue, we revisit a topic from our last edition: the recent tax legislation. Last time, we gave an overview of the 2010 Tax Act. This month, we highlight specific planning opportunities created by the new law.

As it is during any major disaster, The American Red Cross was one of the first and most prominent organizations to provide disaster relief to the Japanese, providing free assistance to victims when they need it most. Learn more about how you can be a part of The American Red Cross through volunteering here, or through donation here.

Finally, we are less than a week away from Autism Awareness Month. The Easter Seals of Central Texas have been providing services to caregivers of adults and children with disabilities for over 70 years. They are able to expand their services and touch more lives with the assistance of donors and volunteers. You can find out more about the Easter Seals by attending their gala on April 16.

We stand ready to serve you!

www.GreeningLawFirm.com

The Greening Law Firm, P.C. blog

Season's greetings,

Ronald G. Greening

The Greening Law Firm, P.C.

Planning Opportunities Under the 2010 Tax Act

In our January issue of The Planner, we took a close look at the changes in the federal estate, gift and generation-skipping taxes as found in the 2010 Tax Act (formally named the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010).

The 2010 Tax Act extends to December 31, 2012, the income, estate, gift and generation-skipping tax provisions enacted during the administration of President George W. Bush ("EGTRRA"). For the two-year period beginning January 1, 2011, it reinstates the unified federal estate, gift and GST exemption, sets the exemption at $5 million and sets the tax rate on amounts over the exemption at 35%. It also includes, for those 2 years only, a new "portability" provision that allows the executor of the first spouse to die to transfer any unused gift and estate tax exemption to the surviving spouse. It also changes the estate tax law and provides an option for estates of those who died in 2010. And it presents more uncertainty, as this tax "relief" is only for two years and has built-in uncertainties. Plus, just like under EGTRRA, if Congress does not act before the sunset date, the EGTRRA provisions and the 2010 Tax Act provisions will disappear and the tax laws will revert to how they read in 2000.

These changes, and the uncertainty that comes with them, present some unique planning opportunities and challenges for estate planning professionals. In this issue, we will examine some of them.

Opting Out of the Estate Tax for Those Who Died in 2010
The 2010 Tax Act made a retroactive reinstatement of the estate tax, setting the exemption for 2010 at $5,000,000 (without portability), and repealed the carryover basis provisions that were unique to 2010. However, the executor for a decedent who died in 2010 may elect to opt out of the new law and therefore have the modified basis rules (unlimited step-down for loss assets and a limited step-up of $1.3 million ($60,000 for non-resident non-citizens), plus $3 million for assets passing to a surviving spouse) and no estate tax apply.

The executor of a 2010 decedent has until September 19, 2011, to make the election; file estate tax, GSTT and basis allocation returns; pay estate tax; and make disclaimers.

Planning Tip: In almost all cases for 2010 estates that are less than $5 million (the applicable exclusion amount), the election to opt out should not be made. These estates almost always come out better with the $5 million exemption and fair market value step-up in basis. For larger estates, an evaluation will need to be made before assuming the carryover basis would be better.

Considerations for Determining Whether to Opt Out of the Estate Tax for 2010 Decedents

Calculating how much would be paid in estate taxes now vs. capital gain tax on the future sale of assets.
Anticipating dates of sales of assets. If no sale is expected, there is no need to take the election.
Considering ability to allocate basis adjustments up to the fair market value at the date of death for assets that will likely be sold in the near future.
Anticipating future capital gains rates and ordinary income rates for ordinary income property.
Weighing present value of anticipated income tax costs against current estate tax amount.
Considering how to resolve potential disputes among heirs regarding the $1.3 million limited basis increase. (The surviving spouse will always get the $3 million step-up.)

Example #1: John dies in 2010, leaving $6.3 million estate with $5 million basis to Child.

Estate tax calculation: $6.3 million estate minus $5 million exemption equals $1.3 million taxable estate. Tax rate of 35% produces $455,000 due in estate taxes.

Income tax calculation: $6.3 million in assets minus $5 million basis equals $1.3 million gain. Apply the $1.3 Special Basis Allocation so Child's basis is now $6.3 million, generating complete step-up in basis.

Result: Carryover basis option is the easy choice.

Example #2: John dies in 2010, leaving $8 million estate with basis of $2 million to wife Olivia.

Estate tax calculation: $8 million estate using unlimited marital deduction equals zero taxable estate with zero estate tax. Complete step-up in basis provided under Section 1014. If left in QTIP, can make partial QTIP election to preserve $5 million exemption amount or possible disclaimer to remainder beneficiaries. On Olivia's death (assuming no asset growth and permanency of new tax law), estate tax is 35% of $3 million = $1,050,000.

Income tax calculation: $8 million in assets minus $2 million basis equals $6 million built-in gain. Only $4.3 million of basis adjustment available (special basis allocation of $1.3 million plus spousal basis adjustment of $3 million). Capital gains tax = 15% x $1.7 million = $255,000.

Result: Adjusted basis of $6.3 million vs. $8 million basis with estate tax. Also leaves $1.7 million subject to capital gains in the future.

Planning Tip: Estate taxes are payable currently. Capital gains taxes are only payable when the assets are sold. If they are not sold and the beneficiary dies with the assets in his estate, they would receive a full step-up in basis at his death (assuming current law).

Generation-Skipping Transfer Tax Planning
With the extension of EGTRRA, concerns for the GSTT in 2010 have been resolved. The GSTT exemption for 2010 was $5 million and the tax rate for 2010 only was 0%. While the sunset provision of EGTRRA still exists, the $5 million GSTT exemption and 35% tax rate will allow for some interesting planning opportunities over the next two years.

The goal of GSTT planning is to transfer wealth to generations beyond one's children tax free. The 2010 Tax Act opens a window of opportunity that makes this easier. When the GST exemption was $1 million, it was a very limited resource; sometimes it could be difficult to decide how to best use and leverage it over multi-generational gifting trusts, ILITs and IDGTs. With the larger GST exemption, choices are less limited and easier to implement. The $5 million exemption makes it easy to create much larger dynasty trusts that will be exempt from estate taxes and provide asset protection for as long as the applicable Rule against Perpetuities will allow.

Planning Tip: Design multi-generational trusts so that gifts to the trust are completed gifts to avoid inclusion in the grantor's estate. Avoid estate tax in the beneficiaries' estates by making sure that no beneficiary has a general power of appointment. Benefit multiple generations by using cascading trusts. Allocate sufficient GSTT exemption to always have an inclusion ratio of zero.

Planning Tip: In the past, even if you could find enough Crummey beneficiaries to cover the annual premium for a multi-generational ILIT for gift tax purposes, allocating GSTT exemption to cover all of the premium payments was often the sticking point. A $5 million GSTT and gift tax exemption until December 31, 2012, makes trust funding for future premiums and single pay policies attractive options.

Planning Tip: Clients must be proactive with these dynasty trusts. Automatic GSTT allocation cannot be trusted because of the sunset provision. File a gift tax return to ensure and document the GSTT exemption allocation.

Portability of Deceased Spouse's Unused Exclusion Amount (DSUEA)
For those dying in 2011 and 2012, the executor of the estate may transfer any unused estate tax exemption to the surviving spouse. It must be done on a timely filed Form 706 Estate Tax Return. Only the most recent deceased spouse's unused exemption may be used by the surviving spouse so a remarriage jeopardizes the original DSUEA. The DSUEA can be used to exempt gifts by the surviving spouse. There is no portability of the GST exemption and, unless Congress acts, DSUEA not used by December 31, 2012, will be lost.

Example: Jack and Jill are married and neither has made any taxable gifts. Jack dies in 2011 and leaves his entire $3 million estate to a bypass trust. His executor elects to permit Jill to use Jack's unused exclusion amount. Jill now has an applicable exclusion amount of $7 million (her $5 million basic exclusion amount plus $2 million DSUEA from her deceased husband, Jack).

Chapter 2: After Jack died, Jill married Jerry. Jerry died in 2012, and left his entire $4 million estate to his children. The $2 million DSUEA Jill previously received from Jack is wiped out by Jerry's subsequent death. If Jerry's executor makes the election to permit Jill to use Jerry's DSUEA, her applicable exclusion amount is $6 million ($1 million less than she had prior to Jerry dying). If Jerry's executor does not make such an election Jill's applicable exclusion amount is just her own $5 million ($2 million less than she had prior to Jerry dying).

Alternate ending: Same scenario, but Jill dies in 2012 instead of Jerry. Jill left her entire $3 million estate to a bypass trust; therefore her DSUEA is $4 million (Jill's $7 million applicable exclusion amount minus the $3 million left to the bypass trust). If Jill's executor makes the election, Jerry can use Jill's unused exclusion amount, so his applicable exclusion amount will be $9 million (Jerry's basic exclusion amount of $5 million plus Jill's $4 million DSUEA).

Concerns: Open questions under the 2010 Tax Act are, what exemption is applied to gifts by one holding a DSUEA, and how? Is the DSUEA used first or one's own exemption? If there is an election, how will it be made?

Planning Tip: With the new portability option, clients may think they do not need to include a bypass trust in their planning. That is dangerous thinking. As professionals, we need to communicate that there are still many benefits and reasons to use a bypass trust, including:

Asset protection;
Certainty and control for the first spouse to die over how his/her share of the assets will be managed and distributed;
Protection of the assets in event of a remarriage;
Maximize and preserve GST exemption (portability only applies to gift/estate tax exemption);
Increase in value post death;
State estate taxes (portability is a federal provision and is not applicable to state laws);
Income shifting down to other beneficiaries who might be in a lower tax bracket;
A DSUEA is not indexed for inflation; and
Portability may end and any unused DSUEA lost on December 31, 2012.

Bottom line: bypass trust planning is proven, advantageous and reliable. DSUEA reliance is none of those plus compels filing an estate tax return even for non-taxable estates.

Charitable Donations from IRAs
Previously, those who wanted to make a contribution from their IRA to charity would have a check issued to them, make the donation to the charity, then pay income tax on the distribution and take the charitable deduction. For 2011, those over age 70 1/2 may make tax-free distributions up to $100,000 ($200,000 if married) directly from their IRA accounts to charity and counted against their Required Minimum Distribution (RMD) for 2011. (No tax paid, no deduction.) Donations made in January 2011 may also be counted as having been made in 2010 and applied to any unmet 2010 RMD obligation.

Dealing with the Uncertainty
Over the next two years, we can expect that the estate tax will remain a political football; the House Democrats have already complained that the estate tax exemption is too generous, President Obama suggested increased taxes for the wealthy in his State of the Union Address, and major tax reform hearings are already planned for 2011 in both the House Ways and Means and the Senate Finance Committees. Possibilities during this time include:

Present legislation, with the $5 million exemption and 35% tax rate, will be made permanent.
EGTRRA's 2009 regime, with a $3.5 million exemption and 45% tax rate, will be extended permanently. (This has already been proposed by the House Democrats.)
Congress may do nothing, in which case 2013 will bring a $1 million exemption and 55% top tax rate. (This should be incorporated as a possibility in planning.)
There could even be "permanent" repeal of the estate, gift, and GST taxes. With the $5 million exemptions and 35% tax rate, little revenue will be coming in from them, making them less painful to eliminate.

Practical planning applications can include:

Increased use of trust protectors with amendment power to deal with tax changes coupled with a grantor's statement of intent (to minimize estate taxes, maximize benefits to spouse, etc.);
Decanting provisions, coordinate drafting with state law;
Authorizing the trust protector power to grant a beneficiary a general power of appointment (with higher exemption amounts, it may be advantageous to include property in beneficiary's estate to receive step-up in basis);
Including formula testamentary general powers of appointment;
In decoupled states, funding the marital share with sufficient property to reduce both federal estate tax and state death taxes to lower amount (can divide marital share into two QTIPs);
Having a contingency plan built in for possible repeal: all to a QTIP, all to a bypass trust, percentage division into marital and non-marital shares, etc.

Implementing a Client Maintenance Program
Estate plans that are being written today may not be used for another 15-20 years. Most of them will need revisions during that time. Rather than terminating the relationship when the documents are delivered and signed, a number of practitioners have implemented client maintenance programs for continuing the engagement. This increases the likelihood that the client's estate planning objectives will be achieved, provides an opportunity to review funding and beneficiary designations, and decreases the advisors' liability risk by strengthening the relationship with the client.

Conclusion
With the gift, estate and GSTT exemption so high for the next two years, there is a concern that the public will think there is no need to do any estate planning. All estate planning professionals can re-educate the public about the non-tax reasons to do estate planning, which are ultimately more important than the tax reasons, and the risks of deferring planning. Remember that we are more than planning technicians or document drafters or sellers of product. Most of us are in this field because we want to help clients use, preserve, protect and transfer their wealth responsibly, in order to provide for themselves and their children, and to perpetuate their goals, dreams and values for future generations.

Planning with the $5 Million Gift Tax Exemption

So we've covered opportunities for 2010 estates. Now let's look forward to the powerful planning opportunities that exist for the next two years with the $5 million gift tax exemption. In the process, we'll have to make another quick review of the new law.

Gift, Estate and GST Exemptions and Tax Rates
In 2011 and 2012, the gift, estate and generation-skipping transfer tax exemptions are all $5 million and the tax rate is 35%. If Congress does not act again, in 2013 the exemption will be $1 million and the top tax rate will be 55%. This is the current law and must be considered in all planning. The portability of the gift and estate tax exemption between spouses was also introduced, but only for spouses who both die between January 1, 2011, and December 31, 2012.

Planning Tip: Note that, unlike a surviving spouse's ability to use a predeceased spouse's unused unified credit, the new law does not allow a surviving spouse to use the unused GST tax exemption of a predeceased spouse. This is just one weakness of the new portability provision.

Planning Tip: Be cautious when deciding how to plan for insurance needs, disclaimers and how to fund the bypass trust, considering whether to plan for a $5 million exemption or some lower (e.g., $1 million) exemption. Also, the portability of exemption between spouses may not be around after 2012. Be sure your clients understand the exemption is scheduled to revert to $1 million in 2013, that these uncertainties exist, and that their planning will need to be updated as the laws change.

Income Tax
We also have lower income tax rates for the next two years, but President Obama has made it clear he wants higher tax rates in 2013. Unless there are changes in the next two years, in 2013 the long-term capital gains rate will increase to 20%, the maximum tax on qualified dividends will go back to 39.6%, and the additional 3.8% surtax will be introduced.

Planning Tip: Take advantage of the lower income tax rates that we have for the next two years, and look for opportunities to accelerate income into 2012. Choose an 11/30 year-end for any estates currently being administered to maximize the lower income tax rates for as long as possible.

2010 Planning Revised
The estate tax was reinstated for 2010, with a $5 million exemption and 35% tax rate. Estates may elect out and pay no estate tax, but the modified carryover basis rules would apply. The gift tax exemption in 2010 remains at $1 million with a 35% gift tax rate.

Planning Tip: Because of the "sunset," there may be only a two-year window of opportunity to make substantial gifts using the $5 million gift exemption.

Tax Planning Opportunities in 2011 and 2012
With the gift tax exemption at $5 million per person, we can expect a huge transfer of wealth over the next two years. Those who have already used their $1 million exemption now have an additional $4 million to use for gifts. And while we cannot be absolutely certain that the $5 million gift tax exemption will be honored if it returns to $1 million in 2013, it would certainly make sense for Congress to do so. Let's look at some of the planning opportunities that will immediately maximize these transfers.

Planning Tip: Start meeting with your wealthier clients now to discover which properties they could give away now that will be relatively painless for them.

Spousal Access Trusts
The general concept of a Spousal Access Trust is that one spouse can transfer up to $5 million in trust for the benefit of his/her spouse, children and future generations. Benefits include asset protection, estate tax protection, direct descendent protection (property stays within the bloodline) and income shifting. Risks are the reciprocal trust doctrine and grantor trust rules.

In U.S. Estate of Grace, 395 US 316 (1969), the Supreme Court developed a two-part test to determine whether trusts will be ignored because they are "reciprocal": a) the trusts must be inter-related and b) the trust creation and funding must leave the grantors of the trusts in essentially the same economic position as they would have been in if they had created the trusts naming themselves as life beneficiaries. If both parts are met, the IRS and/or the courts will uncross the trusts and include the value in each of the grantor's gross estate, nullifying their careful planning.

Planning Tip: To avoid the reciprocal trust doctrine, the lawyer on the planning team must take care to draft outside of the Grace doctrine and not make the trusts identical. Be sure to file the gift tax return and allocate the GST exemption if desired rather than rely on the automatic allocation rules.

Gifts to an Irrevocable Life Insurance Trust
Life insurance can be used to provide income for a family, pay estate taxes, and as an income tax shelter. If structured properly so that the trust maker does not have any incidents of ownership, none of the assets (policy proceeds) of an irrevocable life insurance trust (ILIT) will be included in the trust maker's taxable estate, making them free of both income and estate taxes. ILITs will become more popular as income tax rates increase, in 2013, from the current 35% rate to39.6% or even to 43.4% for clients subject to the 3.8% surcharge.

The general concept is that the ILIT is the owner and beneficiary of the policy on the trust maker's life. The trust maker makes gifts to the trust to cover the insurance premiums, and the trustee makes the premium payments. At the trust maker's death, the proceeds are paid to the trustee who can use the funds to purchase assets from the estate and provide liquidity for estate taxes and other expenses. The trustee can make discretionary distributions of income and principal during the lifetime of the trust's beneficiaries, which can include the trust maker's spouse, children and future generations. Assets that remain in the trust are not included in the beneficiaries' estates and are protected from creditors.

Planning Tip: Using the $5 million gift and GST exemption amounts can provide substantial amounts of life insurance (think single or 2-pay premium) and benefit the grantor's children without future estate, gift and/or GST tax.

Planning Tip: Be very cautious about canceling existing insurance policies now. If possible, wait until 2013 nears, when we will know what the exemption will be at that time.

Dynasty Trusts
Generally, a dynasty trust is one that benefits multiple generations, and none of the trust assets are included in the trust maker's or any of the beneficiaries' taxable estates. Not being taxed at each generation (historically at 45-55%) allows the assets to grow tremendously over the years.

However, there is a generation-skipping transfer tax that applies when a transfer is made by the grantor to a "skip person" (grandchild, great-grandchild, or other person more than 37.5 years younger than the grantor). Currently, each grantor is allowed a lifetime GST exemption on the first $5 million of taxable transfers directly to a skip person or to a trust that could benefit a skip person. A husband and wife can combine their GST exemptions. This perhaps temporary GST exemption increase will make dynasty trusts even more popular over the next two years.

The dynasty trust established in the right jurisdiction can theoretically go on forever, with the trustee making discretionary distributions for the lifetime of each beneficiary in each generation. Advantages include creditor protection, divorce protection, estate tax protection, direct descendent protection, spendthrift protection and consolidation of capital, which typically results in higher returns and better management options.

Planning Tip: The choice of situs is critical. Choose a state with no income tax, good creditor and divorce protection, and no Rule against Perpetuities. Make sure you file a gift tax return. If the trust maker allocates enough GST exemption to cover the entire gift, neither the gift nor any distribution from the trust will ever be subject to the GST tax.

Planning Tip: Be aware of the President's budget proposal to limit GSTT-exempt trusts to 90 years, regardless of the applicable rule against perpetuities. While this was introduced in 2011 and will not likely gain support in the current Congress, this may gain support in the future.

Income-Shifting Trusts
The concept here is to shift income to younger family members to reduce income taxes. Parents can move up to $10 million ($5 million each) in income-producing assets gift tax-free to their children who can then use the income to invest or purchase insurance.

Example: A husband and wife gift $10 million of non-voting S-Corporation stock to their four children (15% each) via using Qualified Sub-Chapter S Trusts. There is no gift tax because the parents use both of their $5 million gift tax exemptions. After the gift, 15% of the income generated by the S-Corporation will pass through to each child.

Benefits include creditor protection on the assets; estate tax savings because the assets are being transferred to the children and out of the parents' estates; and income tax savings because the children will pay income taxes at a lower rate than their parents. Over time, this can save a tremendous amount in income taxes.

Long-Term Tax Planning Opportunities
Lifetime Gifting
After the $5 million exemption has been used, it may be advantageous to give away more and pay the gift tax at the current 35% gift tax rate. Also, the gift tax is "tax-exclusive" while the estate tax is "tax-inclusive." A taxable gift of $1.00 makes the donor liable for a $0.35 gift tax, for a total of $1.35. On the other hand, $1.35 in a decedent's estate taxed at 35% nets only $0.88 to the heirs.

Planning Tip: As was the case in 2010, gifting can be a wait and see scenario. As we get closer to 2013, we hope to know what the 2013 gift tax rate will be. If the rate is moving to 55%, it would be advantageous to make additional gifts and pay the 35% gift tax in 2012 rather than wait and pay a 55% gift or estate tax in 2013.

Grantor Retained Annuity Trusts (GRATs)
The creator of a GRAT retains an annuity payout for a fixed term. At the end of the annuity term, any residual assets remaining in the trust pass to the remainder beneficiaries, such as the trust creator's children, free of any gift and estate tax (but not free of GST tax exposure).

The tax treatment of a GRAT is based on the assumption that the GRAT assets will grow at exactly the Section 7520 rate in effect at the time the GRAT was established (2.4% in January, 2011). If the GRAT assets outperform the 7520 rate, there will be a larger than anticipated (for tax purposes) balance to transfer to the trust's remainder beneficiaries at the end of the annuity term. In addition, all income earned by the GRAT during its term is taxed to the trust's creator because the trust is "defective" for income tax purposes, allowing for an enhanced probability of having a tax-free gift to the remainder beneficiaries.

Planning Tip: GRATs are currently most effective for property that is extremely volatile or is difficult to value, or for large estates that have already used their $5 million exemption. Unlike a dynasty trust, a GRAT can only create a one-generation transfer unless GST exemption is allocated to it based on the actual value of the trust assets at the end of the annuity term.

Intentionally Defective Grantor Trusts (IDGT)
An IDGT is a trust that is a grantor trust for income tax purposes, but not for gift, estate, and GST tax purposes. IDGTs are especially powerful right now for wealthy clients because of the $5 million gift and GST tax exemptions and historically low interest rates.

Using an IDGT, a married couple can currently gift up to $10 million in undivided interests in highly appreciating assets, then sell additional interests in the same assets to the IDGT. The value of both the donated and the sold assets can be discounted due to minority interest. If the assets are wrapped in an LLC or limited partnership, their value may also be adjusted for lack of marketability and lack of control. The trust then pays an installment note back to the trust maker. Assuming the growth rate on the assets sold to the IDGT is higher than the interest rate on the installment note, the difference is passed on to the trust beneficiaries free of any gift, estate and/or GST tax.

Also, because the IDGT is a grantor trust (i.e., "defective" trust for income tax purposes), no capital gains tax is due on the installment sale, the interest income on the installment note is not taxable to the grantor, and all income earned by the trust is taxed to the grantor, effectively allowing for a tax-free gift to the trust's beneficiaries equal to the tax burden borne by the grantor. Discretionary distributions of income and principal are made to the trust beneficiaries during their lifetimes, and all assets in the IDGT remain outside of their taxable estates.

Planning Tip: The grantor should make an initial gift of at least 10% of the total transfer value to the IDGT or have other security for the financed sale so that the IDGT has sufficient capital to make its purchase of assets from the grantor commercially reasonable.

Conclusion
Estate planning professionals have an exceptional window for transfer opportunities in 2011 and 2012 with the $5 million estate, gift, and GST tax exemptions; lower income and estate tax rates; and still-depressed property values. And, as is often the case, these opportunities provide excellent opportunities to work with a team of advisors to provide the best possible results for mutual clients.

Practice Limited to Estate Planning, Estate Administration, Probate, and Elder Law

506 West 15th Street, Austin, Texas 78701, 476.0888
1601 Williams Drive Georgetown, Texas 78628, 931.0888

For professionals' use only. Not for use with the general public.
You have received this newsletter because I believe you will find its content valuable, and I hope that it will help you to provide better service to your clients. Please feel free to contact me if you have any questions about this or any matters relating to estate or wealth planning.

The hiring of an attorney is an important decision. The items discussed in this newsletter are of a general nature and not intended to provide legal advice. Please consult with a qualified estate planning/elder law attorney to determine the best options for your personal circumstances.

In accordance with IRS Circular 230, the content of this newsletter is not to be relied upon for the preparation of a tax return or to avoid tax penalties imposed by the Internal Revenue Code. If you desire a formal opinion on a particular tax matter for the purpose of filing a return or avoiding the imposition of any penalties, please contact us to discuss the further Treasury requirements that must be met and whether it is possible to meet those requirements under the circumstances, as well as the anticipated time and fees involved.

To comply with the U.S. Treasury regulations, we must inform you that (i) any U.S. federal tax advice contained in this newsletter was not intended or written to be used, and cannot be used, by any person for the purpose of avoiding U.S. federal tax penalties that may be imposed on such person and (ii) each taxpayer should seek advice from their tax advisor based on the taxpayer's particular circumstances.