Monday, January 31, 2011

No Claw Back on Estate Taxes, Say Experts

According to experts, the tax deal and extension of the estate tax will not create a retroactive gift tax liability. Thank heavens for small favors, am I right?


The recent extension of the estate tax at a 35 percent rate will not result in a "claw back" tax obligation for people who make gifts in 2011 and 2012 that exceed their post 2012 estate tax exemption allowance, according to a trio of tax experts.

In a new BNA Tax & Accounting webinar that will be held on Feb. 10, 2011, Estate Tax Changes, noted tax authors and commentators Jerry Hesch, Alan Gassman, and Christopher Denicolo will present analysis concluding that the passage of the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 does not cause this type of "claw back" tax obligation.

“Their analysis comes at a time when many commentators have speculated that a reduction in the estate tax allowance for 2013 could cause "retroactive gift tax liability for deaths after 2012,” said BNA Tax & Accounting managing editor Harry Pskowski.

The new $5 million exemption, together with a 35 percent tax rate, applies to estates of those dying in 2011 and 2012, as well as to gifts and generation-skipping transfers made in those years. Then, in 2013, the pre-EGTRRA law will return, with a $1 million exclusion and a maximum 55 percent tax rate.

The presentation will allow participants to focus on the opportunities offered for planners by these changes, and bring clarity where there has been much confusion.

Hesch, Gassman and colleague Christopher Denicolo will show how many estates of wealthy taxpayers who died during 2010 may elect to be subject to the estate tax in order to have new taxable basis in the assets they leave to facilitate having new depreciable basis and less capital gains liability for their families.

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