Uncle Sam wants to crack down on estate taxes
From the New York website: The Treasury Department and the Internal Revenue Service are seeking to crack down on tactics that allow the wealthy to sidestep estate and gift taxes.
Earlier this month officials proposed changes to “valuation discounts,” which allow people to disperse assets — such as real estate — into holding companies in order to lower the value of the asset and decrease the amount of taxes they have to pay, the Wall Street Journal reported.
Assets worth less than $5.45 million — or $10.9 million for a couple — are exempt from estate and gift taxes. The proposed regulations would make it more difficult to claim these discounts — often between 30 and 50 percent of value — and could prevent additional discounts if the taxpayer dies within three years after making certain gifts, the newspaper reported.
A hearing on the proposed rule changes in scheduled for Dec. 1. If the rules are applied, those who want to apply the valuation discounts will have a 30-day window after the regulations are finalized. Some critics expect that the rules will be revised before they are enacted. John Porter, an attorney with Baker Botts in Houston, told the newspaper that the Treasury was “overstepping its bounds” and that the current language of the rule change is too broad and applies to practically all family-controlled entities.
“If these rules go through in current form, business owners are going to be taxed on value they may not have, or have access to,” he said.
[WSJ] — Kathryn Brenzel
Source: The Real Deal