Gift and Estate Tax Exemptions
June 2024
In 2017 the Tax Cuts and Jobs Act (“TCJA”) more than doubled the lifetime estate and gift tax exemption from $5.6 million to $13.61 million in 2024 for individuals (after indexing for inflation). These exemption increases will expire at the end of 2025, unless Congress acts before then, reverting to their pre-2018 level.
President Biden and former President Trump have laid out their general positions on how they would handle the sunsetting provisions of the TCJA. President Biden has said that he would allow the income tax cuts for the rich under the TCJA to expire, while protecting those who earn less than $400,000 annually. Former President Trump stated at a fund-raising dinner that he would extend the TCJA’s tax cuts.
Letting the higher estate and gift tax exemption expire in 2026 would negatively impact a small but influential group of taxpayers, while extending them would negatively impact the federal budget.
Considering the state of politics today it is uncertain if Congress will extend or otherwise change the exemption levels. Therefore, prudent taxpayers should take advantage of the currently higher tax exemption levels before they possibly expire in 2026.
Some estate planning strategies that can be utilized to take advantage of current exemption levels include an irrevocable trust for descendants that use existing gift and generation skipping tax exemptions and a spousal lifetime access trust.
We advise clients to ask their estate planning professionals if they can take advantage of this window of opportunity to utilize the current higher estate and gift tax exemption before it’s too late.
Relevant Court Cases
-
Janet Walker and Linda Martens v. Glenn Daniels, et al.,
Court of Appeals of Iowa,
No. 23-0711,
filed May 22, 2024
-
Clark County Assessor v. Dillard Department Stores, Inc.,
The Indiana Tax Court,
Case No. 22T-TA-00011,
filed June 5, 2024
Recent Business Valuation Articles
-
“Finding Value in the U.S. Corporate Bond Market,”
by Liuren Wu and Hashim Zaman,
posted June 3, 2024
-
“Validating Valuation: How Statistical Learning
Can Cabin Expert Discretion in Valuation Disputes,”
by Andrew C. Baker, Jonah B. Gelbach and Eric Talley,
dated April 30, 2024
Recent Engagements
- Valuation of the non-voting common
stock of an automobile dealership for
gift tax reporting purposes.
- Valuation of 100% of the common stock
of a specialty distributor on a controlling
interest basis for estate tax reporting purposes.
- Valuation of 100% of the member
interests of a global logistics company
on a controlling interest basis for
employee options incentive purposes.
- Valuation of 100% of the common
stock of a niche insurance provider
on a controlling interest basis for
marital dissolution purposes.
";
"
";
"
";
"
";
"
";
"
";