Gift tax exclusion, estate and gift exemption rise in 2018

The IRS announced in Revenue Procedure 2017-58 that the gift tax exclusion will rise to $15,000 in 2018. The 2017 exclusion of $14,000 has been in place since 2013. Using the annual gift tax exclusion, in 2018 any person can gift up to $15,000 to another person without using any of his/her lifetime estate and …

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Lifetime gifts v bequests after death

The White House’s proposed tax reform plan includes repealing the estate tax. However, the “plan” is a one page outline with a bullet point simply stating “Repeal the death tax.” There are no details as to when this will occur. Moreover, the repeal could be short lived. As we saw back in 2010, the estate …

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Will this Estate Planning Loophole be Closed?

On August 2, 2016 the U.S government proposed making it harder for wealthy business owners to transfer assets to heirs without paying estate and gift taxes. The Treasury Department’s plan would place new limits on a common tactic used to transfer interests in illiquid businesses. “By taking advantage of these tactics, certain taxpayers or their …

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The Estate or Gift Tax Return is Filed with the IRS – Then What?

I attended the American Society of Appraisers Advanced Business Valuation Conference a couple of weeks ago and had the opportunity to attend a session presented by an IRS attorney, Theresa Melchiorre. I always jump at the chance to hear an IRS presenter, as I like to get a glimpse of what goes on behind the …

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Mom and Dad, help! I want to buy a house!

You’ve finished college, landed a great job, and have identified the perfect starter home. But as you examine your finances, you find you do not have sufficient funds in your bank account to buy a house, and with a minimum down payment, your monthly take home pay is a bit too low to cover the …

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99.7% of Estates Are Not Subject to Federal Tax

The American Taxpayer Relief Act of 2012 (“Act”) increased tax exemptions for federal estates, gifting and generation skipping trusts (GST). The Act also escalated the aforesaid exemptions each year for inflation. Below is a summary of the 2015 status of the three exclusions along with the ceiling for the federal estate tax rate applicable to …

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Will Your 2012 Gift Tax Return be Audited by the IRS?

In 2012 taxpayers and their advisers were scratching their heads about the presidential election and its impact on future gift and estate tax exemptions because the $5 million inflation indexed per person federal estate and gift tax exclusion was scheduled to drop to $1 million on January 1, 2013. Consequently, many wealthy matriarchs and patriarchs …

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In Federal Tax Court Your Report Is Your Testimony

The level of detail and the manner of explanation in a valuation report for tax compliance purposes is extremely important as the report serves as the expert’s direct testimony in Federal Tax Court. It’s interesting to observe the important steps that families take to protect their assets – hiring top wealth management teams, tax consultants, …

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The Fiscal Cliff Act – A Breakdown of Tax Provisions

After much back and forth negotiations the terms of a fiscal cliff resolution have finally been successfully negotiated. The major tax provisions are as follows: • The income tax rate increases to 39.6% (up from 35%) for individuals making more than $400,000 a year ($450,000 for joint filers; $425,000 for heads of household); • The two-percentage-point reduction …

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Valuation Discounts for Gift of Single-Member LLC Interests

In a split decision by the U.S. Tax Court (Suzanne J. Pierre v. Comm., 133 T.C. No. 2), the court dealt with the issue as to whether a single-member LLC is to be disregarded for transfer tax purposes (i.e., gift tax purposes), thus treating the gift as a direct gift of the underlying property of …

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