Fellow appraiser Christine Guernsey, ISA CAPP sent me some information from a tax and estate attorney regarding some proposed legislation changes on charitable donations and gift taxes that are in the new Obama budget.
Now this does not mean this will become policy or future law, but it does show the direction the White House/Administration would like to see tax law go.
As the attorney states many thought the recent tax laws passed earlier this year would be permanent, but the Administrations budget shows they still want changes, and that could impact the appraisal profession and donations and gifts in the future.
The tax letter stated
In January, Congress passed and the President signed into law fiscal cliff legislation. Part of that seemed to make permanent changes to the estate, gift and generation-skipping transfer tax system. Three critically important provisions were:
Setting the exemption at $5,250,000 for 2013 for all transfers – gift, estate and generation-skipping
Indexing the exemption to inflation so it would go up by about $120,000 per year
Setting the tax rate at a flat 40% for amounts in excess of the exemption.
For less than 4 months, those of us who specialize in estate planning were pleased to think we had a “permanent” system which would allow us to do planning without having to re-plan and plan again as the law shifted and changed.
But, the President just released his proposed budget, and he already wants to tear up the new law, and go back to laws as they existed 4 years ago, which would:
Set the exemption for gifts at only $1,000,000 – an 80% decrease
Set the exemption for estates at only $3,500,000 – a 33% decrease
Increase the tax rate to 45% - up from the 35% rate in effect last year – a 29% increase
The proposal would take effect after Obama leaves office. Which means you have time to plan. Do not, as others did in 2012, wait until the last minute to get things done. You need to start now. The sooner the better.
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