• Long-term capital gains and qualified dividends are taxed at a maximum rate of 15%.
• Taxpayers in the 15% ordinary tax bracket (maximum taxable income of $69,000 for a married couple filing jointly in 2011) or lower will enjoy a 0% tax rate on long-term gains and qualified dividends.

• Business owners can still write off 100% of the cost of capital improvements made before Dec. 31 – including new computers, phones and other qualifying items for a potentially large deduction on their 2011 returns.
• For philanthropically inclined investors older than 70½, the opportunity to make a deductible charitable donation directly from a traditional IRA expires at the end of 2011. If you don’t need the money, you could donate up to $100,000 and satisfy your required minimum distribution at the same time.
• If you’re green-minded, some tax breaks are available for investments in alternative-energy home improvements, such as solar panels or tankless water heaters, made before year-end.
• The latest version of the AMT Patch is scheduled to expire at the end of 2011, meaning this may be the last chance for some taxpayers to avoid paying the Alternative Minimum Tax.

• If you took advantage of the rule change allowing higher-net-worth taxpayers to convert a traditional IRA to a Roth in 2010, you may still be spreading out the tax consequences of that decision, thanks to a special provision that expired at the end of that year. Conversions made in 2011 will be fully taxable this year.
• The federal gift tax exemption has gone up starting in 2011, allowing a lifetime exemption for up to $5 million (as opposed to $1 million previously) in gifts to family (i.e. spouses, children and grandchildren). The annual exclusion amount remains at $13,000 per person.

• If you have more than $3,000 in investment losses for 2011, you can carry over excess losses into future tax years.
• The IRS “wash sale” rule prevents you from reinvesting money withdrawn from a losing investment in the same or a substantially identical investment for 30 days, either before or after the sale for a loss.
• There are ways to avoid a wash sale and maintain exposure to the market – for example, by investing the loss proceeds into an ETF within the same market sector as the position sold.

The changing tax environment, particularly for higher-net-worth individuals, makes it more important than ever to understand your specific situation, options and potential implications. We recommend you contact your Financial Advisor and tax professional now to learn more about how you should address these tax-related investment and financial planning issues before year-end.

Investors should consider the investment objectives, risks, charges and expenses of exchange-traded funds (ETF) carefully before investing. This and other information is found in the prospectus. For a prospectus, contact your Baird Financial Advisor. Please read the prospectus carefully before investing.

ETF’s are subject to the same risks as their underlying securities and trade on an exchange throughout the day. Although investments in ETF’s may gain exposure to the same sector as an individual stock, the correlation may be minimal due to a high number of holdings.