From the Family Business Coalition:
On Friday, November 29, the Treasury Department published Treasury Decision 9884.
The regulations make it clear that the federal estate/gift/GST exemptions of $11.58 million per individual and $23.16 million per couple with spousal portability (new 2020 exemptions announced in Rev. Proc. 2019-44) can be fully utilized without taxpayers fearing a "claw back" if the exemptions revert back to pre-TCJA levels after current policy is scheduled to expire in December of 2025.
Family businesses planning for succession can now transfer up to the maximum exemption amounts until 2025 without fearing a large tax bill if the estate/gift/GST exemptions aren't extended before 2026. If a taxpayer gifted $10 million in 2018 when the exemption was $11.18 million per individual and died in 2026 when the exemption reverted back to $5.49 million per individual, there was a question as to whether that taxpayer would be required to pay a "claw back" 40% tax on a portion of the amount already transferred tax free. The resolution of this issue provides more certainty for businesses working towards transitioning to the next generation of ownership. Most of our organizations represent many large multi-generational family businesses and the resolution of this issue represents one less hurdle family businesses must face in continuing on to the next generation of ownership. FBC is encouraged to see the Treasury Department prioritizing regulations important to family owned and operated businesses.
The Family Business Coalition sent this letter to Secretary Mnuchin on Friday regarding the changes.
Read more in Forbes, Accounting Today, and the Wall Street Journal.
During a time when many Democratic candidates for President are calling for a top death tax rate of 75% or higher (see a list of current Democratic death tax plans here) we welcome this positive news on the estate tax.
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