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Bay Area Estate And Tax Planning Law Firm
Estate Planning
Trust Administration and probate

Tax authorities cite estate, gift-tax “loophole;” vow change

| Aug 10, 2016 | Estate Taxes |

OK, a suitable preface to today’s blog post is certainly an up-and-front disclaimer that its subject matter is not exactly egalitarian.

That is, what follows is not going to readily apply to most readers of this or any other tax blog.

Nonetheless, we believe that the narrative is notable — and likely of interest to any reader interested in tax-related matters — for its focus on tax planning strategies of wealthy individuals and families. And, indeed, if you command many millions of dollars in wealth, a recent announcement issued by the U.S. Department of Treasury might well have material implications for you.

Here’s the gist of what the Treasury Department says will happen in the near future, following a public comment period and final adjustments made to recently proposed regulations: an alleged “loophole” of real magnitude will be closed off for select taxpayers who partake of a planning strategy that regulators say has long enabled them to undervalue assets.

More specifically, the IRS will be more closely focused upon wealthy planners who have a substantial money interest in a corporation, partnership, closely held family business or other entity. Government officials say that many filers employ a strategy that allows them “to use certain aggressive tax planning tactics to artificially lower the taxable value of their transferred assets” to third parties for estate and gift tax purposes.

Notably, the “loophole” and corresponding government proposal to seal it apply only to assets that exceed the $5.45 million estate tax exemption granted to individuals and $10.9 million applicable to married partners, respectively.

Americans of every demographic and income level routinely and sensibly explore ways that promote their ability to lawfully minimize tax burdens.

Any person with questions or concerns regarding any tax-related topic — including one pursuant to which tax officials question the legality of a taxpayer’s actions and/or planning strategies — can obtain candid guidance and knowledgeable representation from a proven tax attorney.


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