Strategic Gifting Before 2026 The Tax Cuts and Jobs Act of 2017 presented an opportunity by significantly raising lifetime gift and estate tax exclusions, but this window is closing soon. With the exclusions set to expire at the end of 2025, there is an urgency to plan your gifts sooner than later. Imagine it is December 2025, and you have a chance to gift $14 million to your children without incurring a single dollar in federal gift tax. Fast forward just one day to January 1, 2026, and that same gift could trigger a whopping $2.8 million in taxes. This…
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Rising Levels of High Mental Readiness for an Exit Business owners often-times see exit planning as a complicated, overwhelming, and emotional process. Accordingly, few owners adequately prepare for this significant event. However, an exit plan is essential to help business owners manage the illiquid wealth in their businesses, particularly in turbulent times such as these marked by strife that is present in local and global economies, national and international politics, and market disruption. The International Exit Planning Association sees the present challenges as an opportunity to provide advice to these owners considering an exit. This article discusses the dynamics of…
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If your clients are super wealthy and want to avoid a big tax bill, they’re better off retiring in Michigan than in Maryland. The IRS collects around $18 billion in estate taxes annually, according to the agency. To read the full article in Financial Planning, click: Where Should Rich Clients Retire?
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There’s an acronym few financial advisors are familiar with—but they absolutely should get to know. DAPTs, the abbreviation for self-settled domestic asset protection trusts, can play an important role in planning for both income and estate taxes. To read the full article in FinancialPlanning, click: The Vital Tax Planning Tool Few Advisors Know.
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Now that the status quo of tax planning has been upended by the passage of the Tax Cuts and Jobs Act of 2017, wills, trusts, and portfolios are all due for a once-over and advisors are bracing to make sense of some of the most sweeping tax changes in decades. To read the full article in FinancialPlanning, click: Avoid “Dangerous” Planning Generalizations After New Tax Law.
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Try this Tactic to Minimize Generation-Skipping Taxes Generation-skipping taxes and other issues can complicate the process of transferring wealth from one generation to another. William Kriesel, CPA, PFS, explains how giving relatives a partnership interest in a family business can overcome some of these challenges. To read the full article in The CPA Journal, click: Accomplishing Estate Planning Goals through the Use of Partnership Income Tax Rules.
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The Tax Rules Were Never Friendlier, But Changes May be on the Way The biggest loophole in the tax code may soon be coming to an end—at least according to the messages sent by the Obama administration and its recent budget proposals. The American Taxpayer Relief Act of 2012 (ATRA) set a whole new tone for most estate plans when it took the dreaded estate tax off the table. However, it is no secret that the IRS has been making a concerted effort to recapture some of the revenues lost from property transfers by way of gift or upon death.…
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The House passed a bill earlier this year that would repeal the estate tax, but it’s unlikely the Senate will approve the measure. David Lenok, senior editor for Wealthmanagement.com and Trusts & Estates, looks at an act that would allow people who expect to owe estate taxes to pay what they owe while they are still alive. To find out more on this Wealthmanagement.com article, click: Bi-Partisan Estate Tax Reform Bill Introduced.
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Are you aware of the new reporting requirements required between an estate and anyone acquiring property from the decedent? Alistair M. Nevius, J.D., JofA’s editor-in-chief, explains the new reporting and statement requirements. To find out more on the JofA’s article, click: New law imposes immediate estate basis and reporting requirements.
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Democrats and Republicans in the House are divided on the issue of repealing the estate tax. Republican says this tax is unfair to people who must pay taxes as they accumulate wealth through the years. Democrats want to expand the tax, hitting more estates with a higher top rate. Bernie Becker discusses these issues in The Hill and explains the House is divided. [button color=”blue” link=”http://thehill.com/policy/finance/238862-both-parties-fired-up-over-vote-on-estate-tax-repeal” target=”_blank” font=”arial” align=”left”]For more suggestions on ways to discuss fees with clients, click here.[/button] Image courtesy of Salvatore Vuono/FreeDigitalPhotos.net
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(…and possibly their valuation consultant?) Rev. Proc. 2014-18 provides a simplified method for certain taxpayers to obtain an extension to elect portability under Code Sec. 2010(c)(5)(A). This method allows a widow or widower to apply a deceased spouses unused exclusion (DSUE) amount to the surviving spouse’s subsequent transfers during life or at death. In these situations, the ability to file and use the DSUE amount is a must.
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In early 2009, Carl Pohlad, investor and principle owner of the Minnesota Twins, passed away, leaving controlling ownership of the team to his sons. In settling the estate, the new owners now find themselves embroiled in a tax tangle with the IRS. The primary point of contention exists with what Pohlad’s share in the team was actually worth at the time of death. According to the IRS, Pohlad’s ownership is valued at $293 million and is demanding $121 million in additional estate taxes. The estate contests that upon Pohlad’s death, which was shortly after the economic crisis of 2008, the…
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Estate of Elkins Included Works by Picasso, Jackson Pollock, Henry Moore, Paul Cezanne, and Jasper Johns Roger Russell at Accounting Today reports that in the case, Estate of Elkins, 140 TC No. 5, the court applied Section 2703(a)(2) of the Tax Code in valuing the art, which included works by Picasso, Jackson Pollock, Henry Moore, Paul Cezanne, and Jasper Johns. Section 2703(a)(2) of the Tax Code provides that the value of any property should be determined without regard to any restriction on the right to sell or use the property. The IRS Commissioner claimed an estate tax deficiency in excess of $9…
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The Wall Street Journal Recounts What the IRS Advises: Moves to Make as April Grows Near April deadlines may not be that far way, but some Americans still haven’t even rounded up their W2s, the Wall Street Journal noted in a (just-before-deadline) filing last year. Acknowledging the tax procrastination is a national pastime, the Internal Revenue Service issued some tips and a series of videos to help last-minute filers avoid the common blunders that could delay their returns. Here is a look at the most common errors:
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The Tax Court Speaks Loudly and Firmly on the Responsibilities of Business Appraisers Hempstead & Co. has published “Estate of Gallagher is a Valuation Tutorial.” The article emphasizes the importance of providing the court with a clear and convincing explanation of the assumptions and arguments you have employed in carrying out a business appraisal. It discusses the recent Tax Court Memorandum opinion in the Estate of Gallagher v. Commissioner, (TC Memo. 2011-148). The court’s valuation was closest to the value on the return as filed.
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There’s good news and bad news. Here’s the low-down. Dean Zerbe offers his take at Forbes on how the current deal will affect small-business owners:
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Today Individual Federal Gift Law Exemption is $5.12M. In Months it May Drop to $1M. Result: Surging Demand for Appraisals. Lou Carlozo at Reuters reports that faced with the possibility of the lifetime gift tax exemption dropping precipitously next year and the estate tax rate rising, wealthy individuals are rushing to transfer their assets to family members. More:
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Who Are America’s Wealthiest People? Small- and medium-sized businesses are the engines that drive the American economy. An IRS study of everyone who died with a net worth of at least $600,000 (and thus was required to file an estate tax return) showed America’s wealthiest citizens all have one thing in common: they all held significant blocks of stock in closely held private companies. In a nutshell, the surest way to get rich in America is to own a business. Want to know the actual numbers? According to IRS reports, over six million businesses file tax returns each year: 80…
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Estate of Natale B. Giustina v. Commissioner What happens when a case lands in the United States Tax Court where Form 706 found the fair market value of a business share at $12.6 million and the IRS estimates it’s worth $36 million? Find out, in Estate of Natale B. Giustina v. Commissioner! At issue was a 41 percent share in a closely held timber company. Meanwhile, in the Delaware Chancery Court, In re Answers Corp. Shareholders Litigation finds plaintiff shareholders arguing to enjoin the sale of the company because they believed it was of higher worth. The Court finds the…