Archive | Estate & Gift Tax

To Gift or Not to Gift – That is the Question

Annual exclusion gifting is a common estate planning strategy to reduce the size of one’s estate in their lifetime.  EOY GiftingThe annual exclusion limit for 2015 has been set at $14,000.  Also in 2015, donors have a lifetime exemption of $5.43 million.  If married, each spouse has a $5.43 million exemption for a total combined exemption of $10.86 million.

For those who still have an estate valued over the lifetime exemption amount, annual exclusion gifting may be a good idea.  Continue Reading →

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Not All Trusts Are Created Equal

In a previous Acorn, we looked at the holding in Mikel v. Commissioner, a Tax Court case in which the IRS lost yet trusteeanother attempt to defeat Crummey powers.  “Crummey powers” (so named after the landmark 1960’s tax case,
Crummey v. Commissioner) you may recall, are withdrawal powers built in to a family trust that permit one gift tax annual exclusion to be claimed for each trust beneficiary. Continue Reading →

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Proposed Federal Budget Would Hit Estate Plans Hard

President Obama’s Proposed Budget Causes Estate Planning Stirestate planning tax changes

President Obama’s administration recently released his budget for the fiscal year ending December 30, 2015.  If some or all of the provisions dealing with estates become law, there may be quite a bit of estate plan shuffling in the coming years. Below is a summary of the items related to estate, gift and generation-skipping transfer (GST) taxes:

  1. Exemptions and rates take the time machine back to 2009:

Estate, gift and GST transfer tax exemptions and rates would return to 2009 levels – a $3.5M exemption and a 45% rate. Importantly, the gift tax exemption would only be $1M.  No indexing for inflation. (No gift or estate tax would be imposed for gifts over those amounts since then, while exemptions were higher.)

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Private Foundation Loses Exempt Status

 An IRS Warning to Private Foundation Directors

A private foundation recently had its exempt status revoked by the IRS.  This ruling (TAM 201438034) serves as a pointed reminder to private foundation directors that exempt status can be revoked if the IRS determines that organization materially changed its original charitable exempt purpose.


The Private Foundation’s Orginal Mission: A Private School

In the ruling, the foundation was originally granted exemption to operate a private school.  However, the foundation’s home state subsequently passed legislation permitting formation of charter schools.  Based on the limited facts in the ruling, it appears the foundation then switched gears. It stopped operating its own private school, and began to look for ways to facilitate the growth of charter schools in the area.

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