IRS Sees No ‘Clawback’ From
Higher Estate and Gift Tax Exemption
Jacquelyn Himes, CPA
Focused on You. Dedicated to Your Success.
November 26, 2018

As reported in Bloomberg on November 21, 2018, in an article entitled “ IRS Sees No ‘Clawback’ From Higher Estate and Gift Tax Exemption” by Lynnley Browning , the   Internal Revenue Service has proposed a potential benefit for wealthy taxpayers. The IRS claims that wealthy individuals who give gifts to their heirs under a generous but temporary provision of the Tax Cuts and Jobs Act (TCJA) will not owe taxes later on such gifts. 
 
TCJA doubled the value of assets that can be transferred to heirs without triggering federal estate or gift taxes over a lifetime -- to almost $11.2 million for an individual and $22.4 million for a married couple. The thresholds rise slightly in 2019 and potentially more in later years, before expiring in 2025, when the exemptions revert back to half of their current levels. Amounts over exemption levels are taxed at 40 percent. “Making large gifts now won’t harm estates after 2025,” the agency said.
 
Even so, taxpayers should try to take advantage of this potential benefit sooner rather than later. Democrats could potentially seek to roll it back this benefit. The agency will hold a hearing on the proposed rule on March 13, 2019.
 
Individual gifts will still be limited by an annual exclusion, which is $15,000 this year.
 
Feel free to call any member of our team at 610-828-1900 with questions. You can also contact Jackie Himes, CPA, director – tax services at  [email protected]  or me at  [email protected] . We are always happy to help.
Martin C. McCarthy, CPA, CCIFP
Managing Partner
McCarthy & Company, PC

Disclaimer :  This alert is for informational purposes only and does not constitute professional advice. Information contained in this communication is not intended or written to be used as tax advice, and cannot be used by the recipient to avoid penalties that may be imposed under the Internal Revenue Code. We strongly advise you to seek professional assistance with respect to your specific issue(s).