The Internal Revenue Service updated the estate tax exemption amounts in Revenue Procedure 2018-18. The inflation-adjusted estate tax exemption for individuals in 2018 is $11.18 million and $22.36 million for married couples.
Today, Congress passed a sweeping tax bill, as widely expected over the last few weeks. The bill passed solely along party lines, with no Democrats voting for the bill. President Trump is expected to sign the bill into law, shortly.
The changes in the transfer tax laws made by this bill are as follows:
Our colleagues in our Tax Advice and Controversy group have also summarized the proposed changes to individual, business, and international taxes in the new bill released on November 2 by the House Ways and Means Committee.
House Republicans released their new tax bill on November 2, 2017. As expected for such a significant proposal, the final bill, if passed, will likely look different. Nonetheless, the bill, in its current form, provides the base starting point from which the House GOP intends to negotiate, both within their party and without.
The changes in the tax bill related to transfer taxes are as follows:
The Department of the Treasury has withdrawn the controversial proposed regulations for Section 2704 of the Code. Section 2704 limits valuation discounts in family-controlled entities for certain lapsing rights and restrictions. The proposed Regulations would have expanded the scope of Section 2704 by adding a new classification of disregarded restrictions and by narrowing several longstanding exceptions. Comments submitted after the regulations were proposed complained that the requirements were unclear and that the impact on state law was difficult to predict. On October 2, 2017, the Department of the Treasury submitted a report recommending that the proposed 2704 Regulations be rescinded and today the proposed Regulations were officially withdrawn by notice published in the Federal Register (82 FR 48779).
Due to the devastation and upheaval caused by Hurricane Harvey, the Internal Revenue Service is providing extra time for certain individuals and businesses to file their returns and pay taxes. Among the relief provided is a new January 31, 2018 filing deadline for individual taxpayers who have valid extensions until October 16 and businesses which have extensions until September 15. According to IR-2017-135:
“The IRS is now offering this expanded relief to any area designated by the Federal Emergency Management Agency (FEMA), as qualifying for individual assistance. Currently, 18 counties are eligible, but taxpayers in localities added later to the disaster area will automatically receive the same filing and payment relief.”
The IRS has set up a landing page to assist victims of Hurricane Harvey.
Update: The IRS has extended similar relief to victims of Hurricane Irma.
In a long-awaited move, the IRS announced recently that taxpayers will now have at least two years to file an estate tax return to elect portability of a decedent’s unused estate tax exemption to the decedent’s surviving spouse.
The new rule was articulated by the IRS in Revenue Procedure 2017-34 and became effective as of June 9, 2017. Under this new two year filing window, which the IRS characterizes as a “simplified method for certain taxpayers to obtain an extension of time . . . to make a ‘portability’ election”, a decedent’s estate will have until the later of January 2, 2018 or the second anniversary of the decedent’s death to file an estate tax return to elect portability. In order to take advantage of this simplified method for obtaining an extension of