Tax Deferred Annuities

[robertk011]

Living Member has a Tax Deferred Annuity. Looking for tax consequence
in disposing of the annuity for the owner. Also, if gifted to members of
her family in excess of $12,000, best way to handle taxes for all parties.
Disposition could be made partially in 2009 & 2010.

[DaveO]

You will need to contact the issuer of the annuity to see what the basis is. There will be some gain and some return of principal (basis) when it's surrenderd. If they gift it the basis of the owner carries over. If they gift and it exceeds $12k just file the gift tax returns. No way to avoid the taxes but you might shift it to lower bracket taxpayers.