June 5, 2019 - Douglas Myser

Avoid tax traps with timely appraisal. Informed taxpayers are aware that only the wealthiest individuals should have concerns about the federal estate and gift tax, for gifts and decedents dying in 2018 thru 2025. Thanks to the legislation known as the Tax Cuts and Jobs Act, P.L. 115-97, the basic exclusion amount is more than $11 million per individual, indexed for inflation.. Now estate planners are spending less time and using fewer resources trying to avoid federal estate taxes for clients. They are instead paying closer attention to minimizing clients income tax bills. Further, more taxpayers have been modifying their old estate plans, if not dismantling them completely. Avoid tax traps with timely appraisal.

Estates got more good news when the Tax Cuts and Jobs Act did not attempt to eliminate what some call the biggest loophole in the Code--basis "step up". Too often, taxpayers fail to recognize this major tax saving benefit in Sec. 1014, which allows inheritors to step up the tax basis of inherited assets to their date of death value. On the other hand, tax professionals have been keeping a close eye on this major tax benefit and have been prompt in sharing ideas for building basis in this new estate planning environment. Here are just a few of the popular suggestions that are seen more frequently since the IRS Tax Cuts and Jobs Act's enactment.

Review the overall lifetime gift planning goals of taxpayers. Consider transferring assets to the spouse who is likely to die first. Grantor trusts can help establish basis step up. Revisit old credit shelter trusts. Establishing a higher basis for assets from an estate might be a major tax saver: however, estate planners and beneficiaries need to be aware that some strings may be attached. Most important, evidence is mounting that the IRS is well aware that creative step up techniques will, in many cases, wipe out revenues from capital gains taxes. And that may cause a change in the tax code down the road.  Avoid tax traps with timely appraisal. If you did get caught in a tax trap and face a large tax debt, call a well respected Tax Resolution Company, that can take you thru your Tax Relief options. We have 35 years in the Tax Resolution business and know all options, like the IRS Fresh Start Program.