The information contained herein is general in nature, has been obtained from various sources believed to be reliable and is subject to changes in the Internal Revenue Code, as well as other areas of law. Neither Oppenheimer & Co. Inc. (Oppenheimer) nor its affiliate, Oppenheimer Asset Management (OAM), provide legal or tax advice and the information provided herein should not be construed as such. OAM and Oppenheimer a registered broker/dealer and investment adviser are both indirect wholly owned subsidiaries of Oppenheimer Holdings Inc. Securities are offered through Oppenheimer. Neither Oppenheimer nor any of its affiliates, directors, officers or employees provide legal or tax advice and the information provided herein should not be construed as such. Clients of Oppenheimer should consult their own legal and tax advisor before making any investment.

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Year end tax issues December 21, 2010 On December 17th, the “Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010” was signed into law by President Obama. This legislation provides for the continuation of the tax cuts implemented during the George W. Bush administration and adds a few new items. Below we have listed a few general considerations as 2010 draws to a close and some items to keep in mind as we enter 2011. . 2010 Year End General Considerations

• IRA Required Minimum Distributions (RMDs) are mandatory in 2010 for inherited IRAs and for IRA owners that are over age 70 ½.

• Charitable Gifts from IRAs for 2010 can be made up until January 31, 2011 – Individuals over

70 ½ subject to Required Minimum Distributions (RMDs) can direct up to $100,000 to a qualified charity of their choice for 2010 and 2011. These dollars will not be treated as taxable income or as a charitable itemized deduction; however the gift will satisfy their RMD requirements or a portion thereof depending upon the individual situation. A special provision has been made for those who wish to take advantage of this tax treatment in 2010. By election, charitable contributions made in January 2011 can be treated as though they were made in 2010.

• Roth IRA Conversions - The Roth IRA Conversion Tax for 2010 conversions can be paid in

2010 or over a two year period, 2011 and 2012. The Roth IRA conversion pay over two year’s provision only applies to 2010 conversions. As 2010 Marginal Income Tax Rates are unchanged in 2011 and 2012 your decision may be based upon other issues (i.e. cash flow resources) rather than taxation concerns. A Roth IRA conversion will require an increase in tax withholding or estimated tax payments to avoid a penalty tax during the year(s) elected for the tax payment.

• 2010 Tax Rates and tax treatment have been extended through the end of 2012 for Marginal

Income Tax Rates, Capital Gains, Itemized Deductions, Standard Deduction and Personal Deductions. The need to accelerate ordinary income or to take long-term cap ital gains in 2010 to avoid higher tax rates may no longer be an issue since income tax and capital gains rates will remain stable for the next two years.

• An Alternative Minimum Tax (AMT) Exemption patch has been put in place for 2010 and 2011. • Federal Estate Tax – for decedents dying in 2010 the estate executor can elect to treat the

estate without federal estate taxes and limited step-up in cost basis or with an exemption amount of $5 million, a top tax rate of 35% and full step-up in cost basis.

The information contained herein is general in nature, has been obtained from various sources believed to be reliable and is subject to changes in the Internal Revenue Code, as well as other areas of law. Neither Oppenheimer & Co. Inc. (Oppenheimer) nor its affiliate, Oppenheimer Asset Management (OAM), provide legal or tax advice and the information provided herein should not be construed as such. OAM and Oppenheimer a registered broker/dealer and investment adviser are both indirect wholly owned subsidiaries of Oppenheimer Holdings Inc. Securities are offered through Oppenheimer. Neither Oppenheimer nor any of its affiliates, directors, officers or employees provide legal or tax advice and the information provided herein should not be construed as such. Clients of Oppenheimer should consult their own legal and tax advisor before making any investment.

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• Direct Gifts to Grandchildren in 2010 – While these gifts will be subject to a Gift Tax at a rate of

35% for gifts that exceed the $1 million dollar gift tax exemption in 2010, they will not be subject to the Generation Skipping Tax (GST) in 2010.

• Gifts made to a Trust in 2010 for Grandchildren – Gifts made to a trust in 2010 for the benefit

of grandchildren will not be subject to GST at the time of the gift nor when future distributions are made to the grandchildren; however, these gifts will be subject to a Gift Tax at a rate of 35% for gifts that exceed the $1 million dollar gift tax exemption in 2010.

• Use Flexible Spending Account dollars – you don’t have to claim the dollars until March 31,

2011, but you have to spend the reimbursable dollars by the end of the year. • Contribute to 401(k)’s and other retirement plans by 12/31/10. Don’t forget the age 50 catch-up!

Other

• Estate Tax Changes Effective 1/1/2011 to 12/31/2012 – the Estate Tax Exemption has been increased to $5 million with a maximum tax rate of 35% and the Gift Tax Exclusion is again unified with the Estate Tax Exemption Amount. This means that an individual may allocate the $5 million between lifetime gifts and the federal exemption as desired. Additionally the Generation Skipping Tax (GST) Exemption is $5 million with a maximum tax rate of 35%.

• Portability of Unused Estate Tax Exclusion for Surv iving Spouse – The surviving spouse of a

decedent dying after December 31, 2010, can use the deceased spouse’s unused estate tax exclusion plus their own for lifetime gifts or at death. This requires that an election is made on the deceased spouse’s estate tax return with a specific amount for the use of the surviving spouse. This is only available through the end of 2012. Unused GST is not portable.

• Health Flexible Savings Account Changes (Flex) – Part of The Patient Protection and

Affordable Tax Care Act signed in March of 2010. Beginning in 2011 those dollars eligible for Flex reimbursement will have to conform to the definition of qualified medical expenses used for itemized deductions. There is an exception for over-the-counter medication accompanied by a prescription. In 2013 the deduction for Health Flex accounts will be limited to $2,500 per year, indexed by CPI going forward.

We recognize that each individual situation is unique and encourage you to discuss these items with your personal legal and tax advisor.