Gift Tax Archives | SF Tax Counsel

01Apr 2021 by Pat Geddie

Major Estate and Gift Tax Increase Proposed in the Senate

By Anthony Diosdi On March 25, 2021, Senator Bernie Sanders of Vermont and Senator Sheldon Whitehouse of Rhode Island introduced a bill entitled “For the 99.5% Act.” If the bill is enacted, it dramatically changes the current estate and gift tax system. Below, are the most significant provisions of the 99.5% Act:1. There would be a reduction of the estate tax exemption amount to $3.5 million per person and $7 million for a married couple. The exemption would be indexed for inflation. Currently, the estate tax exemption per person is $11.7 million and $23.4 million per married couple. 2. There would be a reduction of the gift tax exemption to $1 million per person. Under current law, an individual is permitted a gift tax exemption of $11.7 million. 3. Currently,…

06Feb 2020 by Pat Geddie

Dynasty Trusts- the Most Powerful Tool Available to Combat the Estate, Gift, and Generation Skipping Taxes

Gift Tax

By Anthony Diosdi Introduction On December 22, 2017, President Trump signed the Tax Cuts and Jobs Act of 2017. The 2017 Tax Cuts and Jobs Act increased the exemptions for federal estate tax, gift tax, and generation-skipping tax (“GST”) to $11,180,000 per person for 2018. The exemptions are indexed for inflation. The tax rates on estates, gifts, and GST transfers is forty percent. The 2017 Tax Cuts and Jobs Act contains a sunset provision. The exemption for federal estate tax, gift tax, and GST are scheduled to revert back to $5.5 million effective January 1, 2026. As a result of the 2017 Tax Cuts and Jobs Act, individuals are presented with a number of estate planning opportunities to transfer significant amounts of wealth out of their estate without the imposition…

27Jan 2020 by Pat Geddie

Are Families Who Took Advantage of the Temporary Increase in the Unified Credit for Estate and Gift Taxation Purposes in for a Very Unpleasant Surprise after 2025?

Gift Tax

By Anthony Diosdi Estate and Gift Tax 101On December 31, 2012, President Obama signed the Economic Growth and Tax Relief Reconciliation Act exempting $5,120,000 (indexed for inflation) from estate and gift taxes, and the generation-skipping transfer taxes (“GST”). The Tax Cut and Jobs Act of 2017, the current law signed by President Trump on December 22, 2017, essentially doubled the transfer tax exemptions from $5 million to $10 million, indexed for inflation. The Tax Cuts and Jobs Act of 2017 currently excludes $11.4 million of assets from estate and gift taxes of a U.S. citizen or resident. However, many of the provisions of the Tax Cut and Jobs Act of 2017 are scheduled to expire on December 31, 2025. This means that on January 1, 2026, the estate and gift…

23Jan 2020 by Pat Geddie

A Possible Solution to Gift Tax Concerns Associated with Cash, Check, or Wire Transfer Gifts from Overseas

Gift Tax

By Anthony Diosdi Estate and Gift Tax 101The Tax Cut and Jobs Act of 2017 currently excludes $11.4 million of assets from estate and gift taxes of a U.S. citizen or resident. The way the estate tax is computed on the gross estate of a decedent which includes “the value at the time of his death all property, real or personal, tangible or intangible, wherever situated.” See IRC Section 2031. After the taxable estate has been determined by subtracting deductions from the gross estate, the tax is determined by applying the rates and computation method of of Internal Revenue Code Section 2001 to the base: the taxable estate. The estate tax is payable by the executor of the estate. Estate and gift (gift taxes will be discussed in more detail…

13Jan 2020 by Pat Geddie

Is 2020 the New 2018 for Estate, Gift, and Generation-Skipping Tax Purposes?

Gift Tax

By Anthony Diosdi This year may be a very busy year for estate and gift tax planning professionals. This is because this year is somewhat reminiscent of 2012. In 2012, the Economic Growth and Tax Relief Reconciliation Act of 2001 was scheduled to expire. The Economic Growth and Tax Relief Reconciliation Act excluded $5,120,000 from estate and gift taxes, and the generation-skipping transfer taxes (“GST”). The expiration of the Economic Growth and Tax Relief Reconciliation Act would have resulted in the tax exemption for estate and gift taxes, and the GST reverting back to only $1 million. Any estates valued over $1 million could have been subject to estate and/or gift tax of up to 55 percent. Fortunately for many American families, President Obama signed the American Taxpayer Relief Act…

20Dec 2019 by Pat Geddie

New Rules Governing Disregarded Entities Owned by Nonresidents Impose Significant New Reporting and Compliance Requirements

Gift Tax

By Anthony Diosdi There is a perception by many countries that the United States is the world’s largest tax shelter. This is because unlike many countries, the United States does not require public disclosure of ownership of its entities, (in particular Limited Liability Companies (LLCs)), or publishing of year-end financial statements for public viewing. The lack of transparency has allowed nonresidents of the United States to form domestic shell to avoid paying foreign income taxes, hide money or commit other acts of wrongdoing. Historically, nonresidents established shell companies in the United States as a domestic disregarded entities.The Treasury Department and the Internal Revenue Service (“IRS”) recently published regulations to combat perceived misuse of U.S. shell companies. On December 13, 2016, the Treasury Department and the IRS issued final regulations regarding…

20Dec 2019 by Pat Geddie

Changes to the 2019 Tax Return that Will Impact All Holders of Cryptocurrency

Gift Tax

By Anthony Diosdi Recently, the IRS announced a significant compliance measure that will impact anyone with financial interests in virtual currency. Taxpayers with a financial interest in digital currency such as bitcoin will be required to check a new checkbox on Form 1040. This checkbox is on the early release draft of the 2019 Form 1040 and it will appear on Schedule 1. This schedule is entitled “Additional Income and Adjustments to Income.” The checkbox is at the top of Schedule 1.The question the checkbox asks taxpayers is:“At any time during 2019, did you receive, sell, send, exchange or otherwise acquire any financial interest in any virtual currency?”This questions sounds eerily similar to Schedule B Part III Line 7. Schedule B Part III Line 7 asks taxpayers if they had…

18Dec 2019 by Pat Geddie

Attention California Homeowners Age 55+: How Proposition 60/90 Could Benefit You

Gift Tax

By Kerrin N.T. Liu Introduction to California Proposition 60/90 If you are a California homeowner age 55 or older, you need to know about Proposition 60/90. Proposition 60 provides voter-enacted constitutional tax relief to ease the tax burden on California seniors downsizing or relocating their principal homes. Proposition 60 accomplishes this by offsetting the effects of Proposition 13 which limits property tax to 2% growth per year but, upon a change in ownership, requires a reassessment of the property at market value. As one can imagine, the new market value on a replacement home is likely significantly higher than compared to the owner’s sold home, which had the benefit of the Proposition 13 growth limit of 2% on taxable value. Proposition 60 provided property tax relief for seniors by preventing a property…

11Dec 2019 by Pat Geddie

All I Want for Christmas is a Refund of the 965 Tax I Overpaid

Gift Tax

By Anthony Diosdi The Section 965 Transition TaxInternal Revenue Code Section 965 imposes a one-time transition tax on a U.S. shareholder share of deferred foreign income of certain foreign corporations (“accumulated deferred foreign income” or ADFI”). For this purpose, a U.S. shareholder is a U.S. person who directly, indirectly, or constructively owns at least 10 percent of either the total combined voting power or total value of a foreign corporation’s stock. Section 965 accomplishes the transition tax by increasing the subpart F income of each specified foreign corporation in the SFC’s last taxable year that began before January 1, 2018 by the greater of the SFC’s ADFI measured in functional currency as of November 2, 2017 or December 31, 2017. By allowing a reduction to the ADFI inclusion, Section 965…

11Dec 2019 by Pat Geddie

Hovering Deficits- Uncertain Times in Cross Border Mergers with the Enactment of the 2017 Tax Cuts and Jobs Act

Gift Tax

By Anthony Diosdi OverviewIn general, Section 367 governs corporate restructurings under Sections 332, 351, 354, 355, 356, and 361 (Subchapter C nonrecognition transactions) in which the status of a foreign corporation as a “corporation” is necessary for the application of the relevant subchapter C nonrecognition provisions. Other provisions in subchapter C (subchapter C carryover provisions) apply to such transactions in conjunction with the enumerated provisions and detail additional consequences that occur in connection with the transaction. For example, Sections 362 and 381 govern the carryover of basis and earnings and profits from the transferor corporation to the transferee corporation in applicable transactions.The subchapter C carryover provisions generally have been drafted to apply to domestic corporations and U.S. shareholders. As a result, those provisions often do not fully take into account…