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gift tax Tag

RE: An Open Letter to My Parents—2013 Annual Exclusion Goes Up to $14,000

Dear Mom and Dad, Good news, for the first time since 2009 the IRS has raised the gift amount allowable under the annual exclusion.  In 2013 a person will be able to give $14,000 to any and each donee, free of gift tax (see Rev. Proc. 2012-41). As an example, in 2013 I will be able to give each of my five children $14,000, or $70,000 total.  Because my wife will also be permitted to make use of her own annual exclusion amount, together we can give up to $140,000 to our children next year, free of gift tax, under our combined...

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Brief History of Transfer (Estate, Gift, GST) Tax Laws

1797.  The first version of the estate tax was levied in the United States in 1797 for the specific and limited purpose of funding the formation of the U.S. Navy. 1862.  The Revenue Act of 1862 enacted an inheritance tax and introduced a gift tax for the first time in order to specifically fund the Civil War effort. 1898.  The War Revenue Act of 1898 implemented a graduated inheritance of between 0.74% and 15% of the amount inherited for the specific purpose of funding the Spanish-American War. 1916.  The Revenue Act of 1916 implemented an estate tax equal to 1% on amounts between...

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Obama’s New IDGT Proposal

By Attorney David M. Grant President Obama’s administration has recently proposed a change to the federal income and estate tax laws that would make the use of the Intentionally Defective Grantor Trust (“IDGT”) strategy essentially useless.  Important elements of the administration’s IDGT proposal can be found here. As a summary of the key features of the proposal, it would: Include the assets of  an IDGT in the gross estate of the grantor for estate tax purposes; Subject to gift tax any distribution from the IDGT to one or more beneficiaries during the grantor’s life; and Subject to gift tax the remaining IDGT...

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Facebook Founder Renounces U.S. Citizenship, Saves Taxes

By Attorney David M. Grant It was announced on Bloomberg.com earlier this week that one of Facebook's founders, Eduardo Saverin, renounced his US citizenship last September.  The article is very good at explaining Mr. Saverin's savings as related to the capital gains tax, but fails altogether to point out his huge potential transfer tax savings as related to the Gift Tax, Generations Skipping Transfer (GST) Tax, and Estate Tax. While he undoubtedly paid the "exit" tax or the expatriation tax (see the Heroes Earnings Assistance and Relief Tax Act of 2008), all future growth and appreciation in Saverin's estate will no longer be subject to...

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Handicapping the Future Estate Tax Exemptions

Gift-Tax-RulesBy: Mark L. Dodds, Esq., Partner at Grant Morris Dodds

So here we are, more than one year after the change in the estate tax law which temporarily at least has repealed the 2010 repeal of the estate tax, replacing it with a $5 million exemption. But the $5 million exemption is not all bad, considering most estate tax pundits never would have predicted the repeal would have seen the light of day, even for the one year for which the repeal actually was effective.

There were several high profile deaths in 2010 where the heirs really hit the jackpot,  among the most notable being the heirs of George Steinbrenner who inherited the $1.5 billion New York Yankees franchise entirely free of estate tax. If Mr. Steinbrenner had died one year earlier, the heirs would have had the federal government as a 55% partner in the storied New York team; had Steinbrenner died a year later, in 2011, the federal government would have been only a 35% partner. Either way, Mr. Steinbrenner got it just right, assuming there can be a right time to die.