Beth Kaufman Talks to Washington Post on Reduced Enforcement of Estate and Gift Taxes
The Trump administration took a step toward blocking stricter enforcement of estate and gift taxes, describing a set of proposed rules as overly burdensome. The new rules, put forward last year by the Obama administration, would increase the taxes owed by some wealthy families.
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The maneuver in question relates to how small businesses and similar entities are appraised for purposes of the estate tax. When a person dies and divides up a business to give each heir a stake, authorities allow the heirs to mark down the value of their share in the business, because each stake might be difficult to sell individually.
Yet some wealthy taxpayers have exploited this rule by putting stocks, bonds or other securities under the control of a legal entity and then claiming that the entity represents a family-owned business in order to bring down the value. When the heirs take control of the entity, they can easily sell off their individual stakes in the assets.
Kaufman said that the rules the Obama administration proposed were overly broad and could negatively affect legitimate businesses as well, but she also said that the loophole will be costly if it is not closed. Taxpayers using this approach could reduce the value of their estates by roughly one-third, she said.
"If you think that the estate tax is evil, then anything that pokes giant holes in it is a good thing," Kaufman said.
For the full article, please visit The Washington Post’s website.
Excerpt taken from the article “The Obama administration had a plan to crack down on estate tax dodgers. Trump’s team is looking to block it.” by Max Ehrenfreund for The Washington Post.