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2012 Income Tax Planning

As the stock markets have rebounded from the lows of the financial crisis, there is a strong potential for windfall gifts from executives who are seeing incredible benefits from the stock options they received after the market collapsed. The traditional thinking with stock options was that they allowed companies to issue large bonuses without reducing cash. More than 260 million stock options were granted in 2008, compared to 10 million in the previous year.

For example, imagine an executive whose stock was trading in the $30s in 2007 and dropped to under $8 a share in 2008—today it closed at $46.17.

Due to the expanded estate assumptions, 2012 is also likely to be a year donors will be interested to review the use of IRAs or other qualified plans, so be prepared to have these conversations!