inheritance tax – Eshcinsel http://eshcinsel.net/ Sun, 17 Apr 2022 16:03:35 +0000 en-US hourly 1 https://wordpress.org/?v=5.9.3 https://eshcinsel.net/wp-content/uploads/2021/10/icon-41-120x120.png inheritance tax – Eshcinsel http://eshcinsel.net/ 32 32 DOF pushes BIR to collect property taxes from Marcos heirs to generate more revenue for government https://eshcinsel.net/dof-pushes-bir-to-collect-property-taxes-from-marcos-heirs-to-generate-more-revenue-for-government/ Fri, 18 Mar 2022 04:52:48 +0000 https://eshcinsel.net/dof-pushes-bir-to-collect-property-taxes-from-marcos-heirs-to-generate-more-revenue-for-government/ Metro Manila (CNN Philippines, March 18) — The Ministry of Finance is pushing the Bureau of Internal Revenue to collect the $203 billion in unpaid property taxes from the Marcos heirs to generate more revenue for the government, which will help institutionalize programs to make life easier for Filipinos amid the crisis. oil crisis. “In […]]]>

Metro Manila (CNN Philippines, March 18) — The Ministry of Finance is pushing the Bureau of Internal Revenue to collect the $203 billion in unpaid property taxes from the Marcos heirs to generate more revenue for the government, which will help institutionalize programs to make life easier for Filipinos amid the crisis. oil crisis.

“In general, we have pushed the BIR and the Customs Bureau to collect revenue, and look for sources of income, as you know, we really need more funds given the situation”, finances the Dried up. Paola Alvarez told CNN Philippines Source Friday.

Alvarez pointed to the lack of funds to subsidize more sectors that are struggling with rising pump prices and rising costs for other commodities.

The BIR, as previously confirmed by the Aksyon Demokratiko party, wrote a formal notice in December 2021 asking the Marcos to pay their inheritance tax.

READ: BIR says it sent written request to Marcos family to pay tax debts at end of 2021

“As to how they (the BIR) approached the heirs, we’re not entirely aware because it’s the BIR that’s dealing with that,” Alvarez said.

According to the BIR, inheritance tax is not a tax on property, but “imposed on the privilege of passing on property on the death of the owner”. She further explained via her official website that “property tax is based on the laws in effect at the time of death notwithstanding the postponement of possession or effective enjoyment of the estate by the beneficiary.”

Presidential candidate Ferdinand “Bongbong” Marcos Jr. earlier claimed “there is a lot of fake news involved” in his family’s unpaid property taxes despite the 1997 Supreme Court ruling that they must settle their debts , which initially amounted to £23 billion in 1997. In other words, based on the BIR’s definition of inheritance tax, the heirs of the late dictator Ferdinand Marcos, namely his wife Imelda and her children Imee, Bongbong and Irene, are forced to pay inheritance tax due to Marcos’ privilege of passing on their property

READ: Bongbong Marcos on unpaid property taxes: ‘A lot of fake news involved there’

Manila Mayor Isko Moreno, who chairs Aksyon Demokratiko, said earlier that the Marcos family should voluntarily pay the amount to show their sincerity for the welfare of Filipinos.

He argued that if the poll favorite is elected and leads the government for the next six years, the $200 billion in tax debts will likely be forgotten.

Alvarez said even the government is currently strapped for resources when it comes to providing meager monthly aid of ₱200 to the country’s poorest households amid the fuel crisis.

The DOF is also pushing the BIR to collect revenue streams from other online games and other forms of taxes.

The government has so far allocated £5billion to subsidize public transport drivers and £1billion in fuel rebates for the agricultural sector, which is also bearing the brunt of rising oil prices.

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Aksyon Demokratiko turns to PCGG to discuss Marcos’ unsettled property taxes https://eshcinsel.net/aksyon-demokratiko-turns-to-pcgg-to-discuss-marcos-unsettled-property-taxes/ Thu, 10 Mar 2022 07:53:38 +0000 https://eshcinsel.net/aksyon-demokratiko-turns-to-pcgg-to-discuss-marcos-unsettled-property-taxes/ Metro Manila (CNN Philippines, March 10) — Manila Mayor Isko Moreno’s political party is seeking clarification from the President’s Commission on Good Government on the status of the Marcos family’s ₱203 billion in unsettled property taxes. In a letter dated March 9, Aksyon Demokratiko President Ernesto Ramel asked PCGG President John Agbayani for clarification on […]]]>

Metro Manila (CNN Philippines, March 10) — Manila Mayor Isko Moreno’s political party is seeking clarification from the President’s Commission on Good Government on the status of the Marcos family’s ₱203 billion in unsettled property taxes.

In a letter dated March 9, Aksyon Demokratiko President Ernesto Ramel asked PCGG President John Agbayani for clarification on Atty’s previous statement. Vic Rodriguez that the commission has a settlement with the Bureau of Internal Revenue regarding the Marcos’ alleged debt. Rodriguez is the spokesperson for presidential candidate Ferdinand “Bongbong” Marcos.

“The question is very simple, can be answered with ‘Yes’ or ‘No’. Did the PCGG and BIR reach an agreement regarding Marcos’ P203 billion debt to the Filipino people?” his letter read.

Ramel said that if there is indeed an agreement, Agbayani must disclose the details which are considered a “matter of public interest”.

“If your answer is ‘No,’ then this is further proof that Marcos Jr.’s camp lied again as they always do about so many matters concerning their family, including their ill-gotten wealth,” Ramel pointed out. .

Rodriguez said earlier that properties related to the estate tax case “are still in dispute.”

He also affirmed that the BIR and the PCGG have agreed that the BIR will await a decision on the said matter “prior to any collection enforcement activities”.

READ: Isko’s party seeks to renew Marcoses claim to settle inheritance tax

Ramel said in his previous letter to BIR that even after the death of the late dictator Ferdinand Marcos Sr. in 1989, his widow Imelda, his only son Bongbong and his daughters Imee and Irene “did not file the tax return with the BIR as required by law, they also did not pay inheritance tax.”

Bongbong Marcos was convicted in 1995 for failing to file tax returns from 1982 to 1985 when he was governor and vice-governor of Ilocos Norte. But the Electoral Commission rejected the majority of petitions challenging his bid on his tax obligations, finding that failure to file tax returns is not a crime involving moral turpitude. At least five of the six dismissed cases are on appeal.

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Popular Again: Using Life Insurance Trusts to Protect Against Estate Taxes | Rivkin Radler LLP https://eshcinsel.net/popular-again-using-life-insurance-trusts-to-protect-against-estate-taxes-rivkin-radler-llp/ Mon, 10 Jan 2022 18:28:14 +0000 https://eshcinsel.net/popular-again-using-life-insurance-trusts-to-protect-against-estate-taxes-rivkin-radler-llp/ Lloyd Harbor Life – January 2022 With the prospect of lower estate tax exemptions and higher inheritance tax rates, now is a good time to consider using life insurance as cover against any inheritance tax. One way to do this is to add an irrevocable life insurance trust (ILIT) to your estate plan. Life insurance […]]]>

Lloyd Harbor Life – January 2022

With the prospect of lower estate tax exemptions and higher inheritance tax rates, now is a good time to consider using life insurance as cover against any inheritance tax. One way to do this is to add an irrevocable life insurance trust (ILIT) to your estate plan.

Life insurance proceeds are included in the deceased’s estate for estate tax purposes (assuming the deceased owned the policy). If the proceeds are payable to a spouse or charity, a deduction equal to the proceeds is permitted, so that no estate tax will be payable on the proceeds. However, if the proceeds are payable to someone else, they will be subject to estate tax if the assets of the estate, including the proceeds, exceed the estate tax exemption amounts. . While estate tax exemption amounts are currently high – the federal exemption for 2022 is $12.06 million and the New York State exemption is $6.02 million. dollars, there is a strong possibility that exemption amounts will be reduced and tax rates increased.

An easy way to keep life insurance proceeds out of your estate is to have an ILIT policy owner. You create the ILIT; ILIT beneficiaries and conditions, in general, can be whoever and whatever you want. The trust is irrevocable. If the financing of the ILIT is done correctly and that certain administrative provisions are respected, the proceeds of the life insurance will not be taxable on your death.

Life insurance is purchased for many reasons, including to protect loved ones, to pay inheritance taxes, and to equalize bequests to children (for example, a child gets the $5 million business and the another receives $5 million in life insurance proceeds). If you’re single, have a $5 million business, and $5 million in life insurance that you own individually, your estate tax bill is calculated on $10 million, subjecting your estate to tax. New York estate tax in 2021 on $4.07 million (resulting in over $1 million in New York estate taxes). If the life insurance had been held in an ILIT, your New York tax bill would have been calculated at $5 million, resulting in a $0 New York estate tax in 2021, allowing your heirs to save more than a million dollars. If inheritance tax exemptions are decreasing, the use of an ILIT is even more compelling.

ILITs have technical rules that your estate planning lawyer can explain to you. Using an ILIT is a simple way to protect your family and reduce your tax burden during these uncertain times.

This article first appeared in the January 2022 issue of Lloyd Harbor life.

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Do you have a plan to protect your inheritance from property taxes? – Family and matrimonial https://eshcinsel.net/do-you-have-a-plan-to-protect-your-inheritance-from-property-taxes-family-and-matrimonial/ Wed, 01 Dec 2021 23:56:12 +0000 https://eshcinsel.net/do-you-have-a-plan-to-protect-your-inheritance-from-property-taxes-family-and-matrimonial/ Goodsill Anderson Quinn & Stifel United States: Do you have a plan to protect your inheritance from property taxes? 01 December 2021 Goodsill Anderson Quinn & Stifel To print this article, simply register or connect to Mondaq.com. When you create an estate plan, you help ensure that the people you care about inherit your assets […]]]>


United States: Do you have a plan to protect your inheritance from property taxes?

To print this article, simply register or connect to Mondaq.com.

When you create an estate plan, you help ensure that the people you care about inherit your assets when you die. Careful planning can maximize the resources you leave to others and minimize the liability for your estate or its beneficiary.

Many people planning their estates in Hawaii could lose a substantial portion of their intended inheritance to estate taxes. Inheritance taxes apply to the value of property someone leaves behind upon death and can reduce what beneficiaries ultimately receive because the executor must pay these taxes before distributing any property.

Have you thought about how inheritance taxes might affect your loved ones after your death?

You may need to worry about state and federal property taxes

Hawaii is one of the few states to impose its own inheritance tax. Once the total value of your estate reaches $ 5.5 million, it is subject to state property taxes. The maximum rate of property taxes in Hawaii is 20% of the value of the estate, in addition to any federal estate tax.

If your estate is large enough to pay federal property taxes, you could lose more than half of its value in taxes alone. Currently, your estate must be worth more than $ 11.7 million to trigger federal property taxes. Qualifying estates stand to lose a lot without careful planning, as the federal estate tax has a maximum tax rate of 40%. The higher the value of your estate, the higher the tax rate that applies to it.

How do you plan for property taxes?

Those who own businesses or real estate are at a higher than average risk of triggering inheritance taxes after they die. There are many ways people can plan ahead and minimize these taxes.

Strategic gifts to family members can be one approach. Another method is to transfer large assets to a trust so that they are not technically part of your estate. Proper succession planning for your business or updated title documents for your home could reduce your risk of estate taxes affecting your inheritance.

Learning more about the challenges of high asset succession going through the Hawaiian probate process can help you plan to maximize what you leave for the people you love.

Originally posted Nov 12, 2021

The content of this article is intended to provide a general guide on the subject. Specialist advice should be sought regarding your particular situation.

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You’ve probably heard that the House Ways and Means Committee has released proposals to increase gift and inheritance taxes in order to support legislation put forward by the Democratic majority in Congress.


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Hey President Biden – What Are You Doing About Estate Taxes? https://eshcinsel.net/hey-president-biden-what-are-you-doing-about-estate-taxes/ https://eshcinsel.net/hey-president-biden-what-are-you-doing-about-estate-taxes/#respond Fri, 29 Oct 2021 01:26:55 +0000 https://eshcinsel.net/hey-president-biden-what-are-you-doing-about-estate-taxes/ WASHINGTON, DC – SEPTEMBER 09: US President Joe Biden talks about the fight against the coronavirus … [+] pandemic in the White House State Dining Room on September 9, 2021 in Washington, DC. As the Delta variant continues to spread in the United States, Biden outlined his administration’s six-point plan, including the requirement that all […]]]>


Let’s dance the 2 step!

Tax advisers and wealthy Americans have worked hard to place stakes in LLCs and other entities holding their investments in specially crafted irrevocable trusts, in the form of gifts or in exchange for promissory notes, in order to have arrangements well in advance of the signing of a new inheritance tax law that may prevent, or significantly reduce, the benefits associated with it.

Bernie Sanders Bill and September 13e The House Ways and Means Committee bills would have significantly reduced inheritance and gift tax exemptions by $ 11,700,000 per person, as well as the most popular and popular inheritance tax techniques. the most effective, but would have acquired vested interests in what is completed before the signing of these proposed new laws.

For many of us it was starting to feel like loading people onto life rafts on the Titanic, as there were a lot more families and assets than there were resources, like lawyers and hours in the day, given the thousands of Americans whose families would be subject to a 40% federal estate tax if they didn’t act quickly enough.

The situation was exacerbated by the rise in the stock market and the surge in real estate values.

The main threats have been the reduction of the inheritance tax exemption from $ 11.7 million to about $ 6 million next year, the inability to make transfers to a trust that would not be taken into account. account for income tax purposes and inability to assess partial or non-voting ownership. participations in LLCs and other entities at reduced prices.

Just a day or two ago, many expected there to be a tax on billionaires instead, but maybe billionaires contacted their senators and congressmen (“their” as well. meaning Senators and Congressmen where they live as opposed to ownership, but I don’t know which is which), which leads us to think that a uniform haircut for all taxpayers over 6 million dollars per person could be expected.

Then, as time seemed to be running out and we eagerly waited to see what President Biden would say today, and in particular, whether he would get 50 senators to cooperate with one of the inheritance tax exemption laws , we heard… …………… nothing.

President Biden did not mention inheritance taxes, so thousands of tax professionals and families were unsure whether or not to breathe, or perhaps breathe easier, but not as easily as it is. hoped, but we can breathe easier now because a “Build The Back Better Framework” document was released by the White House briefing room, providing a few pages of summary documentation on the tax increases that didn’t include none of the previously proposed changes to the federal estate tax rules described above, or the other proposed changes that would have removed with annuity trusts retained by grantors, certain master charitable annuity trusts, personal residence trusts qualified and tax-free exchange of assets between grantors and the trusts they have established. Limited Access Spousal Trusts (“SLAT”) have become a household word and will continue to be very popular (see Forbes blog Inheritance Tax Law Changes – What to Do Now, September 14, 2021).

That’s not to say it can’t be introduced later, but for now it’s at least unexpected.

Many families have used what is known as the “Biden 2-Step,” making a relatively small donation to an irrevocable trust, then selling an LLC or other interest to the trust in exchange for a note to the trust. long term order at low interest rate. This was step 1. Step 2 would be to cancel the note immediately before the adoption of a reduction in the balance of the inheritance tax exemption, or whenever the donor was prepared to do so. to do. Now step 2 may not have to happen, and the donor can keep the note, and a higher degree of personal financial stability having future growth in value outside of his estate, while he pays the income tax earned by the trust and receive small tax-free interest payments from the trust.

So there are now thousands of wealthy family trust schemes in place, or in the process of being put in place, that will still be needed when the inheritance tax exemption is reduced to half of the level otherwise applicable in 2026. , or before that, or when their active values ​​exceed the limits, even if they do not go down.

Instead, we have new Medicare high income taxes that use S corporations and partnering entities to protect themselves from this 3.8% tax, a surtax on people with income over $ 400,000 per year. year, reduced loopholes available to businesses and individuals who use foreign companies to avoid or defer income, and limitations on write-offs of business losses, to name a few.

The latest version of the Build Back Better Act was released today by the House Ways and Means Committee, and all 1,684 pages of it can be viewed by clicking here.

I will be discussing the above situation and other issues with Brandon Ketron during a free live webinar on Saturday, October 30.eat 11:00 a.m. EDT, and we’ll answer questions from the public at that time. You can send an email to info@gassmanpa.com for a free invitation and a proofread link.

Thank you to all readers who have asked us great questions about estate and gift tax planning. I can now schedule vacations with Marcia and the dogs, to be canceled if the flavor of the day becomes another increase in inheritance tax.

Thanks to Brandon Ketron, CPA, JD, LL.M for his contribution to this position.


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Income Tax on Diwali Festival Gifts, Dhanteras 2021 Received From Parents, Son, Daughter, Friends, Family, Relatives Explained https://eshcinsel.net/income-tax-on-diwali-festival-gifts-dhanteras-2021-received-from-parents-son-daughter-friends-family-relatives-explained/ https://eshcinsel.net/income-tax-on-diwali-festival-gifts-dhanteras-2021-received-from-parents-son-daughter-friends-family-relatives-explained/#respond Thu, 28 Oct 2021 04:17:00 +0000 https://eshcinsel.net/income-tax-on-diwali-festival-gifts-dhanteras-2021-received-from-parents-son-daughter-friends-family-relatives-explained/ Some donations are taxable. Representative image Income tax rules for gifts received from family and friends: We all love to share gifts with our loved ones on the occasion of Diwali or Dhanteras. Not just candy and candy, we also share gifts in the form of silver, gold and silver. However, few of us are […]]]>


Some donations are taxable. Representative image

Income tax rules for gifts received from family and friends: We all love to share gifts with our loved ones on the occasion of Diwali or Dhanteras. Not just candy and candy, we also share gifts in the form of silver, gold and silver.

However, few of us are aware that some of the gifts, if not properly flagged, can attract the wrath of the IRS. According to Section 56 (2) of the Income Tax Act, gifts received during a fiscal year may be taxed at the slab rate as “income from other sources”. This article explains everything you need to know about the tax implications of gifts received at festivals or on any day of a fiscal year.

What types of donations are taxable?

Gifts received in cash and for no consideration, such as goods or services in exchange, may be taxed.

According to Archit Gupta, founder and CEO of Clear (formerly ClearTax), in the case of in-kind donations such as jewelry, ingots, sculptures, paintings, etc., they are also taxed at their fair market value if it exceeds Rs 50 000..

“In the case of real estate, if such goods have been received without consideration, the value of the stamp duty is subject to income tax if it exceeds 50,000 rupees. However, if real estate is transferred with adequate consideration, the value of the stamp duty will be taxed if it exceeds that consideration by 50,000 rupees, ”Gupta told FE Online.

The Income Tax Act states that a cash donation from an employer is fully taxable in the hands of the employee.

What types of gifts are not taxable?

The Income Tax Act 1961 exempted gifts received from relatives.

Gupta stated that by law a parent means the individual’s spouse, siblings, spouse’s siblings, their parents’ siblings, any ascendant or line descendant of the individual. or his spouse, and the spouses of all the above. people mentioned.

This means that you will not have to pay any tax if you receive gifts within the family from your parents, brother and spouse, sister and spouse, wife / husband and children and their spouses.

However, gifts received from any other person, including friends, are taxed if they exceed the limit of 50,000 rupees.

READ ALSO | Forgot to show an investment up to Rs 1.5 lakh in SCSS, SSY, NSC in ITR? Do this now

Interestingly, gifts received on the occasion of a wedding, or those received as an inheritance, are tax exempt.

“The only other exemption for tax-exempt gifts, regardless of the donor, is if the recipient is offered on the occasion of their marriage or if the gift is transferred by inheritance or by will,” Gupta said. .

If the employer gives his employee a gift in kind, the gift becomes taxable only if the value of the gift is Rs 5,000 or more.

Is it compulsory to pay taxes on such gifts?

According to Gupta, gifts in India are taxable if they exceed a certain limit. It also depends on who gives or receives the gift. Are they related to each other?

“Section 56 (2) of the Income Tax Act governs the taxation of donations in India. According to this section, if a person receives a sum of money exceeding 50,000 rupees in total per year as a gift, the entire amount will be taxable for income tax. This means that if a person has received several gifts per year and they exceed 50,000 rupees in total, the total value will have to be declared when filing the tax return for that year, ”he said.

Rs 50,000 is not an exemption limit. So even if you receive a taxable donation of Rs 50,001, the entire amount will be taxed at the applicable rate.

“Taxpayers should keep in mind that 50,000 rupees is not an exemption limit. Therefore, if the gifts even amount to 50,001 rupees in total, the total amount becomes taxable at the applicable tax rate, ”Gupta said.

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Property taxes could trap trusts favored by the rich https://eshcinsel.net/property-taxes-could-trap-trusts-favored-by-the-rich/ https://eshcinsel.net/property-taxes-could-trap-trusts-favored-by-the-rich/#respond Mon, 25 Oct 2021 15:35:26 +0000 https://eshcinsel.net/property-taxes-could-trap-trusts-favored-by-the-rich/ Two current tax proposals target key points in the estate plans of most high net worth clients. One is making the headlines, but the other should get more attention. The first focuses on whether a taxpayer who uses his federal exemption of $ 11.7 million from gift and inheritance tax this year can keep that […]]]>


Two current tax proposals target key points in the estate plans of most high net worth clients. One is making the headlines, but the other should get more attention.

The first focuses on whether a taxpayer who uses his federal exemption of $ 11.7 million from gift and inheritance tax this year can keep that amount if he dies after that exemption has fallen. to pre-2017 levels. This drop could occur either through a bill soon or in 2026, the sunset year under the Tax Cuts and Jobs Act.

“Earlier regulations issued by the Treasury protected taxpayers from such clawbacks, but the Treasury reserved the right to issue additional guidance regarding certain gift transactions considered abusive. It appears the Treasury is now looking to issue such additional guidance, ”said Tara Thompson Popernik, research director at Bernstein Private Wealth Management in New York.

The IRS said there would be no clawback but has not closed the door to the possibility. Still, “the effect of a potential recovery should be quite limited,” said Neil V. Carbone, a partner at Farrell Fritz, PC, in New York.

“Many of our clients are aware of the potential changes in the amount of the federal exemption,” Popernik said, “but fewer are aware of the potential impact of changes to the settlor’s trust rules.”

The second question is whether the transferor trust status, which currently only relates to the tax treatment of a trust, will be broadened to also affect the treatment of inheritance tax. “As many trusts created today are structured as transferor trusts, this change has the potential to have a significant impact,” said Popernik.

This proposed law would affect trusts created from the date of enactment, but could also apply to contributions to an existing trust made on or after that date, said Karen L. Goldberg, senior manager of the Trusts and Estates. at EisnerAmper in New York.

The proposed rules for intentionally defective transferor trusts, which include treating distributions as gifts, “do more than shut down life insurance trusts,” Goldberg said. Grantor-retained annuity trusts will no longer be viable because “even if they are successful, any Libres property remaining at the end of the trust will be subject to gift tax.” Sales to faulty grantor trusts won’t work either … because the trust [can be included] in the estate of the transferor, ”she said, adding that spouse’s lifetime access trusts could also be affected.

“Some estate planning attorneys believe Congress has failed to consider all of the unintended consequences of these arrangements,” said Chuck Zuzak, director of financial planning in the Pittsburgh office of JFS Wealth Advisors of Hermitage, Pennsylvania.

Time is running out, but planning is still possible.

To read more stories, click here


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How clients’ residence in the state affects property taxes https://eshcinsel.net/how-clients-residence-in-the-state-affects-property-taxes/ https://eshcinsel.net/how-clients-residence-in-the-state-affects-property-taxes/#respond Mon, 18 Oct 2021 15:23:20 +0000 https://eshcinsel.net/how-clients-residence-in-the-state-affects-property-taxes/ When it comes to inheritance taxes, where your client lives has a big impact on how much their estate will owe when they die. There are both state and federal property taxes, and Congress is considering legislation that would change federal rules. This article will take a look at how the condition your customer lives […]]]>


When it comes to inheritance taxes, where your client lives has a big impact on how much their estate will owe when they die. There are both state and federal property taxes, and Congress is considering legislation that would change federal rules. This article will take a look at how the condition your customer lives in (and dies in) plays a role.

First, here are some background points:

  • You cannot take it with you. The wealth accumulated on earth will be taxed on earth.
  • Spousal transfers help. Generally speaking, jointly owned wealth can be transferred to the surviving spouse without triggering federal inheritance tax.
  • Your client’s estate is like a giant IRA account. The federal government is patient: if they are not paid now, they will be paid later. (In fact, they prefer to be paid now and later.) The money in your client’s retirement account may grow with a tax deferral, but it has to come out at some point, and when it does, it does. ‘IRS expects to impose it. Your client’s estate works the same way. They could own assets that appreciate. They might never sell them. When your client dies, these assets become part of his taxable estate.
  • If your customer can spend or sell it, they own it. Everything on behalf of your client is aggregated in his estate.
  • If your customer controls it, they own it. Your client can reduce their taxable wealth by donating assets to charity. They can use their lifetime exemption to donate assets to others; let them worry about future appreciation. Your client can create trusts. According to the IRS, a person owns assets if they can take them back and use them.
  • There are ways for your customer to have their cake and eat it too. An example is the charitable annuity. Your client can remove assets from their name (and future estate) by donating them to charity. The nonprofit can put these assets into an annuity, providing your client with lifetime income.

State-level inheritance taxes

Your client may assume that state inheritance tax laws are aligned with federal government rules, but they are not. The 50 states can approach the law in 50 different ways if they wish, because it is a source of money for them.

State-level property taxes fall into three categories:

Property taxes. According to taxfoundation.org, 11 states (plus Washington, DC) have an estate tax that follows a procedure similar to estate tax at the federal level. The state reviews the asset pool and applies the exemption level, and the rest is taxed. The level of exemption varies by state:

  • New York: $ 5.9 million exemption, 3.06-16% remainder tax.
  • District of Columbia: $ 5.8 million exemption, 12-16% tax on remainder.
  • Maine: $ 5.7 million exemption, 8-12% tax on remainder.
  • Hawaii: $ 5.5 million exemption, 10-20% tax on remainder.
  • Connecticut: $ 5.1 million exemption, 10-12% tax on remainder.
  • Illinois: $ 4.0 million exemption, 0.8-16% tax on remainder.
  • Minnesota: $ 3.0 million exemption, 13-16% tax on remainder.
  • Vermont: $ 2.8 million exemption, 16% tax on remainder.
  • Washington State: $ 2.2 million exemption, 10-20% tax on remainder.
  • Rhode Island: $ 1.6 million exemption, 0.8-16% tax on remainder.
  • Massachusetts: $ 1.0 million exemption, 0.8-16% remainder tax.
  • Oregon: $ 1.0 million exemption, 10-16% tax on remainder.

Inheritance taxes. Five states take a different approach. Instead of taxing the estate, they levy taxes on the heirs. It operates on a sliding scale:

  • Nebraska: 1 to 18% tax
  • Kentucky: 0 to 16% tax
  • New Jersey: 0 – 16% tax
  • Iowa: 0 to 15% tax
  • Pennsylvania: 0 to 15% tax

Are there “double divers”? Yes. A state has both an inheritance tax and an inheritance tax.

  • Maryland: Estate tax exemption of $ 5.0 million, 0.8-16% tax on remainder. The inheritance tax is 0 to 10 percent.

No inheritance or inheritance tax. There are 33 states that fall into this category. It’s no wonder that many clients choose to change their state of residence as they age and get richer.

  • Alaska
  • Arizona
  • Arkansas
  • California
  • Georgia
  • Florida
  • Michigan
  • New Hampshire
  • New Mexico
  • North Carolina
  • North Dakota
  • Caroline from the south
  • South Dakota
  • West Virginia

The cost of living varies between states and cities within. You can see the compelling reasons people make their money in a high tax state and then move out, establishing residence in a state with both a lower cost of living and more favorable estate tax rules.


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Sell ​​your business in 2021? There is still time to save on property taxes https://eshcinsel.net/sell-%e2%80%8b%e2%80%8byour-business-in-2021-there-is-still-time-to-save-on-property-taxes/ https://eshcinsel.net/sell-%e2%80%8b%e2%80%8byour-business-in-2021-there-is-still-time-to-save-on-property-taxes/#respond Tue, 28 Sep 2021 22:24:38 +0000 https://eshcinsel.net/sell-%e2%80%8b%e2%80%8byour-business-in-2021-there-is-still-time-to-save-on-property-taxes/ Changes in tax legislation on the horizon The odds seem increasingly likely that Congress will succeed, using the budget reconciliation process, in passing a tax bill between October 1 and the end of the year. Income and capital gains tax rate increases are planned, as well as a reduction in the amount of the inheritance […]]]>


Changes in tax legislation on the horizon

The odds seem increasingly likely that Congress will succeed, using the budget reconciliation process, in passing a tax bill between October 1 and the end of the year.

Income and capital gains tax rate increases are planned, as well as a reduction in the amount of the inheritance tax exemption from the current $ 11.7 million to perhaps $ 5.0 million. dollars or even $ 3.5 million per person.

If you are a business owner, the current optimism in the market, coupled with impending changes in tax law, presents a unique climate of urgency in deciding whether or not to sell your business.

Fortunately, closing a sale before the end of the year is always possible. Good companies brought to market now can sell faster and at higher than normal multiples due to historically low interest rates, readily available debt financing, and high levels of “margin cash” for investing.all of which arouse the interest of buyers.

Tax changes alone shouldn’t dictate your decision to sell. That said, specific proposals under President Biden American Family Plan have an impact on the discharge planning. Among the most notable are the proposal to almost double the top tax rate on long-term capital gains to 39.6% (43.4% if you include tax on net investment income) and tax the appraised value of unsold assets on the death of the owner. Long-held strategies for effective tax planning are upset by these proposals.

Take the example of a business owner who plans to pass the interests of the family business to his children upon his death. The owner could see this bequest treated as if it were a sale for income tax purposes, taxable at the rate of 43.4% of capital gains (subject to certain exemptions and deferrals of payment); in effect, the owner could see a loss of the basic tax benefit for gifts of holding these assets until death. In addition, this tax would be independent of the gift and inheritance tax, currently assessed at 40% on amounts donated or transferred on death exceeding $ 11.7 million per person. An increased estate tax rate and a lower exemption amount under the Biden plan would worsen the tax shock.

Often times, as the owner, you don’t have the luxury of scripting the exact timing and path between training and exiting. If external forces (for example, market conditions or changes in tax laws) cause your business to be sold before the end of the year, there is still time to take effective estate planning measures.

3 proactive steps you can take to mitigate estate taxes:

1. Tidy up the constitutive documents

Make sure that your operating agreement, voting agreements, shareholder rights agreements, buy-sell agreements, etc. are up-to-date and complete, and consistent with your overall succession and succession plan. Determine if any provisions are out of date and require updating (such as a valuation formula in a buy-sell agreement). Confirm that all necessary signatures are recorded and that the ownership information is up to date. Because time kills transactions, eliminating potential problems during the due diligence phase is even more critical now if you are looking to close before the end of the year and mitigate the impact of the tax hike.

2. Leveraging generational gifts

If the sale of your business creates a taxable estate, there is strong pre-sale leverage to donate and sell an interest in your business, before a market value is set by an outside buyer. You can take advantage of the lack of market value and the lack of control over discounts for non-voting minority interests ranging from 25% to 35% or more, depending on the circumstances.

Ideally, you should complete any donation of business interests well in advance of signing the LOI with the buyer. The IRS has taken the informal position that the execution of a letter of intent sets a price.

Prior to the LOI, you can maximize lifetime gift planning by removing the business interests from your commuted value estate. Any increase in value at the time of sale, as well as future appreciation of business interests, would occur outside of your estate.

If you just don’t have time to focus on estate planning before signing the LOI, all is not lost. You may still be eligible for “before the deal is done” discounts depending on the uncertainties inherent in any deal.

Discounts for the time value of money held in escrow, the probabilities of achieving earn-out targets, and risk arbitrage regarding the timeliness of a transaction provide a basis for taking discounts on gifts from ‘pre-sale commercial interests, potentially in the 12-13% range.

3. Leverage charitable donations

If you’re inclined to charity, pre-selling charitable donations can help you meet your goals while producing tax-efficient results. For highly valued assets, presale is a great time to consider contributing to a charitable residual trust (CRT). You can donate an interest in your business to a charity and keep an interest in a periodic payment (like an annuity) for a specified term.

At the end of the term, the remaining assets would be transferred to the charity. The tax advantages are threefold: [1] there would be no gift tax on the donation to the charity; [2] as a tax-exempt entity, the charity would pay no income tax on the sale of the interest (notwithstanding the gain on appreciation of the company’s assets at the time of the sale), and [3] you, as a business owner, would benefit from an income tax deduction for the value of assets donated to a charity in the year of transfer.

The IRS Section 7520 interest rates, used to calculate the annuity amount paid to the owner, remain low, making this a good time to consider a CRT.

If your goal is to close the sale of your business before the end of the year, it’s not too late to implement some succession planning and estate planning techniques. Acting now could have a significant impact.

Maribeth Younger, Counsel, Williams Weese Pepple & Ferguson.


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Congress could restore your property tax relief with this new proposal, sources say https://eshcinsel.net/congress-could-restore-your-property-tax-relief-with-this-new-proposal-sources-say/ https://eshcinsel.net/congress-could-restore-your-property-tax-relief-with-this-new-proposal-sources-say/#respond Tue, 28 Sep 2021 21:37:05 +0000 https://eshcinsel.net/congress-could-restore-your-property-tax-relief-with-this-new-proposal-sources-say/ A two-year repeal of the Republican tax law’s $ 10,000 cap on how much people deduct from state and local income taxes has emerged as the main proposal to restore at least part of a tax relief. property tax that has a big impact on New Jersey, two sources involved in the negotiations told NJ […]]]>


A two-year repeal of the Republican tax law’s $ 10,000 cap on how much people deduct from state and local income taxes has emerged as the main proposal to restore at least part of a tax relief. property tax that has a big impact on New Jersey, two sources involved in the negotiations told NJ Advance Media.

The provision would be added to the Democrats’ $ 3.5 trillion spending bill, which is now making its way through Congress, according to the individuals, speaking on condition of anonymity as a deal has yet to be reached.

Congressional Democrats are seeking to secure the deal on the larger spending bill, without which several progressive lawmakers have said they would vote against the separate $ 1,000 billion bipartisan infrastructure measure, which includes l money to be raised to build the much sought-after Gateway Tunnel under the Hudson River. .

The cap has disproportionately affected New Jersey and other high-tax states, most of which send billions more to Washington than they receive in services.

Lawmakers in those states have threatened to oppose any spending bill that does not address the deduction limit. They have enough votes to kill the legislation that is being considered as part of a parliamentary maneuver known as reconciliation, which prevents Republican obstruction in the Senate and allows the Democratic Congress to pass the bill by majority vote.

Republicans decried the national and local tax deduction as a gift to the wealthy. However, they also introduced a law to repeal the inheritance tax which only hits people with assets over $ 11 million, none of them are family farms or small businesses.

The Joint Committee on Taxation found that 66% of those who used the tax break in 2019 earned less than $ 200,000, although a full repeal would give 61% of the benefits to those who earn more than $ 200,000.

The GOP tax law gave 52% of its benefits to those earning at least $ 216,800, according to the Tax Policy Center, a research group.

The House Ways and Means Committee has excluded the provision from the tax changes it drafted, but it could be added when the House Rules Committee considers the bill, currently the subject of negotiations between Democrats. of the House and the Senate.

If the two-year repeal is approved, lawmakers would have to revisit the cap once more before it automatically expires in 2025, with all other provisions benefiting low- and middle-income Americans, unless a future Congress does not vote to extend them. However, the corporate tax cuts have been made permanent. As a result, 83% of the bill’s benefits would go to the top 1% by 2027, according to the Tax Policy Center.

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Jonathan D. Salant can be reached at jsalant@njadvancemedia.com. Follow him on @JDSalant.

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