Taxation of Estates and Trusts
The IRS postponed the payment and return filing requirements for gift and generation-skipping transfer taxes due April 15 to July 15, matching prior postponements granted to federal income taxes and returns.
Taxpayers can obtain unique benefits when it comes to gift and estate tax planning by using trusts and taking advantage of applicable valuation conventions.
The IRS issued final regulations that reconcile the current higher exclusion for the estate and gift tax unified credit amount in effect under the TCJA with the lower unified credit scheduled to go into effect in 2026.
There are various planning opportunities for nonstandard donations and potentially unintended consequences if the donation is not made following
the rules governing the specific area of tax.
This discussion considers some of the key differences
that affect post-mortem planning when looking at entity selection.
As a recent Tax Court case demonstrates, when dealing with property interests in certain cases, advisers must carefully consider whether Sec. 2036(a) can cause an estate inclusion of the property interests.
The IRS issued final regulations that reconcile the current higher exclusion for the estate and gift tax unified credit amount in effect under the law known as the Tax Cuts and Jobs Act with the lower unified credit, which is scheduled to go into effect in 2026, eliminating a possible future clawback of the higher exclusion amount.
This second part of a two-part article covers court cases, proposed regulations, and other IRS guidance issued over the last year on gifts and estates.
This item discusses the implications of the Court’s ruling in Kaestner and compares the issues at hand in Paula Trust.
This article is the first of two parts of an annual update on developments in trust, estate, and gift taxation. Part 1 discusses developments affecting trusts and the generation-skipping transfer tax, as well as inflation adjustments.
The U.S. Supreme Court recently addressed the circumstances in which a state may levy income tax on a trust that has only minimal connection to the
state.
Post-TCJA, expenses that are miscellaneous itemized deductions are taken into account in computing trust accounting income but are now nondeductible in computing taxable income and distributable net income for the trust.
The inclusion of swap powers is a common method of qualifying a trust as a grantor trust for income tax purposes while still removing assets from the
grantor’s taxable estate.
A well-drafted estate plan should address the management and distribution of digital assets to mitigate additional administrative burdens on fiduciaries.
The implications of the TJCA's large increase in the estate and gift tax exemption are complex and affect estate planning for everyone, not just the small percentage of the population who will still file estate tax returns.
Use of a Sec. 2503(c) or minor’s trust allows for transfers of property (and income shifting) to children, while parents maintain control of the property at least until the child reaches age 21.
The U.S. Supreme Court issued a unanimous decision holding that North Carolina’s attempt to tax a trust based solely on the residence of a beneficiary violates the Due Process Clause of the 14th Amendment.
The TCJA amended Sec. 461 to include a subsection (l), which disallows excess business losses of noncorporate taxpayers if the amount of the loss is in excess of $250,000 ($500,000 in the case of a joint return).
It is important to note the role trust accounting income plays when preparing the annual income tax return for the trust, a role that has become
more prominent since the enactment of the TCJA.
The disparate tax treatment between trusts and individuals has grown even more pronounced than it was before the TCJA was enacted.
