Taxation & Estate Planning

Congressional white papers examining the U.S. Federal estate and gift tax system

By Juan C. Antúnez

I don't know of a better way to quickly get your arms around the hot-button issues driving today's estate-tax planning world [and current reform proposals, click here] than the three white papers listed below, all of which were prepared and published by the Joint Committee on Taxation, a nonpartisan committee of the United States Congress. These papers do a good job of explaining highly technical estate tax issues in clear, easy to understand prose that even a U.S. senator can understand.

Taxation of Wealth Transfers Within a Family: A Discussion of Selected Areas for Possible Reform (JCX-23-08), April 2, 2008.

This paper is divided into two parts. The first part describes a prominent feature of the current Federal estate and gift tax system, the partially unified credit against estate and gift tax, and evaluates two possible reforms to that credit. One possible reform to present law’s partially unified credit would be to make the credit fully unified. A second possible reform to the unified credit, referred to as portability, would allow a surviving spouse to benefit from unused exemption amount of the first spouse to die. The second part of this document sets forth a discussion of liquidity to pay estate tax when estates consist largely of farms or other businesses.

Description and Analysis of Alternative Wealth Transfer Tax Systems (JCX-22-08), March 10, 2008.

This paper addresses broad design issues such as rates, exemption amounts, the treatment of farms and family businesses, and alternatives to the present estate and gift tax system. These alternatives include an inheritance tax, an income inclusion approach (under which gifts and bequests are included in the income of the recipient), and a deemed realization system (under which a gratuitous transfer is treated as a realization event and the transferor is taxed on any gain in the property transferred, generally at rates applicable to capital gains).

History, Present Law, and Analysis of the Federal Wealth Transfer Tax System (JCX-108-07), November 13, 2007.

This paper describes the history of the U.S. Federal estate and gift tax system, summarizes the present estate and gift tax rules, and sets forth data and an economic analysis related to wealth transfer taxation.

Full post as published by Florida Probate Litigation Blog on February 09, 2009 (boomark / email).