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IRS Publishes Guidance on COVID-19 Relief for Estate and Gift Taxes

The IRS has published a series of questions and answers that provide guidance with respect to COVID-19 relief for estate and gift taxes, which can be found here.

IRS extends more tax deadlines; EO operations affected during COVID-19 and more

Last month, the IRS announced that certain taxpayers generally have until July 15, 2020, to file and pay federal income taxes originally due on April 15. The IRS has extended this relief to additional returns, tax payments and other actions. As a result, the extensions generally now apply to all taxpayers that have a filing or payment deadline falling on or after April 1, 2020, and before July 15, 2020. The extensions apply to many forms and tax payments made by tax-exempt organizations, including:

  • Form 990-series annual information returns or notices (Forms 990, 990-EZ, 990-PF, 990-BL, 990-N (e-postcard))
  • Forms 8871 and 8872
  • Form 5227
  • Form 990-T
  • Form 1120-POL
  • Form 4720
  • Form 8976

See Notice 2020-23 and Rev. Proc. 2018-58 for more information, including a complete list of affected forms, tax payments and other time-sensitive actions.

IRS operations during COVID-19: mission-critical functions continue

In response to the coronavirus (COVID-19) crisis, the

Thomson Reuters Checkpoint Calculates Projected Inflation-Adjusted Figures for Estate and Gift Taxes for 2020

September 17, 2019

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Based on the inflation measure provided by the Tax Cuts and Jobs Act and Consumer Price Index for the 12-month period ending August 31, 2019, Thompson Reuters Checkpoint has released their projected inflation-adjusted Estate, Gift, GST tax, and other exclusion amounts for 2020, as follows:

The unified estate and gift tax exclusion amount (gift and estate tax exemptions) for gifts made and decedents dying in 2020 will be $11,580,000 (up from $11,400,000 in 2019).

The generation-skipping transfer (GST) tax exemption for transfers made in 2020 will be $11,580,000 (up from $11,400,000 in 2019).

The gift tax annual exclusion amount for gifts made in 2020 will be $15,000 (the same amount as for gifts made in 2019 and 2018).

The annual exclusion for gifts to noncitizen spouses in 2020 will be $157,000 (up from $155,000 in 2019).

The special use valuation reduction limit for estate of decedents dying in 2020 will

SUMMARY OF NEW TAX BILL PROPOSAL

November 3, 2017

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SUMMARY OF NEW TAX BILL PROPOSAL

November 3, 2017

Authored by: Charles Lin

House Republicans released their new tax bill on November 2, 2017.  As expected for such a significant proposal, the final bill, if passed, will likely look different.  Nonetheless, the bill, in its current form, provides the base starting point from which the House GOP intends to negotiate, both within their party and without.

The changes in the tax bill related to transfer taxes are as follows:

  • The transfer tax exemption for gift, estate, and GST purposes is doubled in 2018, from $5,000,000 per person to $10,000,000, as previously indexed for inflation – $11,200,000 per person – and indexed from there.
  • The estate and generation-skipping transfer tax will be fully repealed on January 1, 2024.
  • “Step-up” basis on death for income tax purposes of inherited property (presumably other than retirement plan benefits and other items of “income in respect of a decedent”) would remain in effect, even after 2023,

Projected Inflation-Adjusted Estate, Gift and GST Tax Exclusion Amounts for 2017 Now Available

 

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Based on the Consumer Price Index for the 12-month period ending August 31, 2016, Thompson Reuters Checkpoint has released their projected inflation-adjusted Estate, Gift, GST tax, and other exclusion amounts for 2017, as follows:

Let’s Go Over this Again: Remember to Dot Your I’s and Cross Your T’s

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Even though you think you have done everything right, the statute of limitations may not have started to toll if your Form 709, Gift (and Generation-Skipping Transfer) Tax Return, contains errors. Once a properly completed (how much can we stress the words PROPERLY COMPLETED?) Form 709 is filed, the Service must assess the amount of any gift tax within three years of the filing date. Under the Regs, a transfer is adequately disclosed when the return provides the following:

(i) A description of the transferred property and any consideration received by the transferor; [and] … (iv) A detailed description of the method used to determine the fair market value of property transferred, . . . including any financial data . . . utilized in determining the value of the interest.

Treasury Green Book Proposal: Limit Duration of GST Tax Exemption

459482489The Treasury Green Book provides explanations of the President’s budget proposals.  One such proposal (remember…these are just proposals, not actual changes in the law) that may affect your estate planning is found on page 200 of the Green Book and is re-printed here for your convenience:

LIMIT DURATION OF GENERATION-SKIPPING TRANSFER (GST) TAX EXEMPTION

Current Law

GST tax is imposed on gifts and bequests to transferees who are two or more generations younger than the transferor. The GST tax was enacted to prevent the avoidance of estate and gift taxes through the use of a trust that gives successive life interests to multiple generations of beneficiaries. In such a trust, no estate tax would be incurred as beneficiaries died, because

Treasury Green Book Proposal: Health and Education Exclusion Trusts

459482489The Treasury Green Book provides explanations of the President’s budget proposals.  One such proposal (remember…these are just proposals, not actual changes in the law) that may affect your estate planning is found on page 203 of the Green Book and is re-printed here for your convenience:

MODIFY GENERATION-SKIPPING TRANSFER (GST) TAX TREATMENT OF HEALTH AND EDUCATION EXCLUSION TRUSTS (HEETS)

Current Law

Payments made by a donor directly to the provider of medical care for another person or directly to a school for another person’s tuition are exempt from gift tax under section 2503(e). For purposes of the GST tax, section 2611(b)(1) excludes “any transfer which, if made during the donor’s life, would not be treated as a taxable gift by

IRS Rules that Conversion to Unitrust in Accordance with State Law Will Not Trigger Loss of Grandfathered Protection

A recent Private Letter Ruling (PLR 201320009) issued by the Internal Revenue Service (IRS) blessed a conversion of a grandfathered Trust to a unitrust determination of income, as not causing any loss of the Trust’s generation-skipping transfer (GST) tax grandfathered protection, and not resulting in a gift or in the recognition of any gain. Here, the trust in question had been held for the benefit of the Settlor’s son, but the son had since died and the trust was now held for the benefit of three grandchildren. No additions had been made after September 25, 1985. However, the trust determined the income to be distributed to the grandchildren under the traditional method, with interest and dividends constituting trust income.

Long after the trust became irrevocable as a result of the death of the Settlor, the state in which the trust was being administered enacted legislation authorizing the conversion to a

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