A net gift calculation is accepted under the willing buyer/seller test.
Taxation of estates and trusts
The highest gift or estate tax rate applies after the gift tax annual exclusion amount; the marital deduction and QTIPs are among the possible exclusions.
The remainder interest must be calculated assuming annual distribution amounts equal to the greater of 5% or the fixed percentage stated in the trust instrument.
Gift or estate valuation of interests may be significantly higher, incurring more tax.
The IRS issued the annual inflation adjustments for 2016 for more than 50 tax provisions as well as the 2016 tax rate tables for individuals and estates and trusts.
Proposed regulations under Sec. 2801 would impose a transfer tax on gifts or bequests from covered expatriates made on or after June 17, 2008.
No short-form option is provided; regulatory time extension is allowed only for estates valued below the filing threshold.
The IRS issued guidance delaying the due date for compliance with the recently enacted rules that require consistent basis reporting between an estate and anyone acquiring property from the estate.
The highway funding bill made changes to the Internal Revenue Code that affect estates and beneficiaries, including new reporting rules.
Carryover basis election for estates electing out of estate tax requires special adjustments.
Annual exclusions were available for gifts to a family trust that qualified as a Crummey trust.
Planning to lessen estate, gift, and generation-skipping transfer taxes increasingly requires considering clients’ foreign connections.
The IRS issued final regulations on the portability of deceased spouses’ unused estate tax exemption amounts, which allows surviving spouses to use unused amounts of exemption from the estate tax in addition to their own exemptions.
The IRS issued proposed regulations to amend various regulation sections to take into account special rules that affect the basis of assets acquired from a decedent who died in 2010 and for which an executor made a Sec. 1022 election.
The AICPA sent a letter to the IRS on recommending ways to make it easier for surviving spouses to elect portability of the deceased spouse’s unused estate tax exemption.
State law is applied to determine whether a transferee is liable for a transferor’s tax liability. The Tax Court held that four trusts were not required to pay their former personal holding company’s tax liability. Virginia state law does not contain a corollary to the federal substance-over-form doctrine, and federal
Controversial rules prompted by the Knight decision parse certain income tax deductions of estates and trusts. The IRS issued final regulations on the controversial question of which costs incurred by trusts and estates are subject to the 2% floor on miscellaneous itemized deductions under Sec. 67(a). The regulations apply to
The IRS issued final regulations on the controversial question of which costs incurred by trust and estates are subject to the 2% floor on miscellaneous deductions under Sec. 67(a) (T.D. 9664). The regulations will apply to tax years beginning on or after May 9, 2014. The final regulations retain from
Sometimes after clients create an irrevocable trust, circumstances change and the trust needs to be amended to reflect those changes. Sometimes these changes are related to family events, such as the marriage, divorce, or even death of the beneficiary; sometimes the client wants a new fiduciary or to have the
The American Taxpayer Relief Act of 2012 raised the top income tax rate to 39.6%, and a new 3.8% tax on net investment income also applies beginning in 2013. Both taxes apply to trusts and estates with income in excess of $11,950 in 2013, in contrast to much higher thresholds for individuals. This new tax regime necessitates drafting wills and trusts to give executors and trustees maximum discretion so they can reduce these taxes.