The Treasury Department and IRS released proposed rules late Tuesday that would benefit wealthy individuals who are seeking to avoid taxes on large gifts.
The guidance, which is scheduled to be published in the Federal Register on Friday, is part of the agencies' efforts to implement the tax-cut law that President Trump signed last year.
The tax-cut law significantly increased the amount of money that's exempt from the estate and gift taxes, but only for 2018 through 2025. The exemption amount for an individual was $5.49 million in 2017, under the old tax code, and is $11.18 million in 2018.
Stakeholders had questions about whether someone who made a large gift between 2018 and 2025 but then died after 2025 would have the gift subject to the estate tax at the lower-exemption level.
The IRS said that under the proposed rules, those who plan to make gifts between 2018 and 2025 could do so without worrying that they'll lose the tax benefits of the higher exemption amount after 2025, when the estate tax changes in the Trump tax law are set to expire.
The proposed rules would take effect once they are finalized.
Story fails to mention usually estate valuations are current fair market value of assets, not cash on hand. The majority of people with estates this large are small business owners. Say a local hardware store owner who bought a building in 1960 for $200,000. He dies today building is worth $7,000,000.
Owner can pass business onto children to run without having to pay capital gains tax, with real money that they don’t have.
If children/heir sell property quickly for estate purposes, they’re not hit with capital gain tax. Many heirs may force family member to buy out their share. Other heirs have not “extra” cash.
Most small owners roll profit back into their business, not line their pockets.