1 minute read
Key Takeaways
from Summer/Fall 2021
by agcgeorgia
1. Holding appreciated assets until death to achieve step-up in basis for heirs and avoid income tax is no longer a sound strategy.
2. Under the proposed provision to tax transfers of property at death or by gift, the taxpayer will be deemed to have sold the transferred asset, resulting in a taxable gain with no proceeds from the deemed sale to pay the capital gains tax.
3. The proposed provision that results in gain recognition when gifting to trusts (other than revocable wholly owned grantor trusts) limits the benefits and flexibility of transferring income producing property into intentionally defective grantor trusts (IDGTs).
4. Installment sales will become an effective strategy in keeping annual income close to, if not under $1 million, and thus avoiding exposure to top long-term capital gains rates of 43.4%.
5. Like-kind exchanges may no longer be a viable option to defer large gains (more than $500k/$1M depending on filing status). Qualified Opportunity Zones investments remain a viable option for partial gain deferral and exclusion of gain in the future.
6. Changes to the tax code are imminent, regardless of whether most of the proposals brought forth in FY 2022 Revenue Proposals come to fruition – recall that many provisions of the Tax Cuts and Jobs act are set to expire after 2025. ■
