Home » Snapshot of Tax proposals for 2021 by William D King

Snapshot of Tax proposals for 2021 by William D King

WILLIAM D KING

There are significant changes in the Federal tax law that impacts the wealthy individual and families. WILLIAM D KING says the proposed tax law amendments are in the plan after the new government formation. The scheme helps in addressing the estate and tax planning updates. 

William D King supports that it is essential to make a note of the new tax amendments. The preliminary proposal is for the 99.5 Percent Act and the STEP Act, which came out with the Green Book. You can also jot down the use of gift and skipping transfer exceptions.

Take a sneak peek at the 99.5 Percent Act

In the first quarter of 2021, the Senator released the estate and gift tax reformation legislation. It is a combination of standard planning devices that also marks the increase of the estate tax rates. However, some of the plans will only come into the picture after the president’s signature on the bills. Here is the summary of the critical points of the proposal:

  • Reduction of estate tax exemption to $3500000, minus the past reportable gifts. There is a considerable decrease in exception from last year, which was $11700000 per person.
  • Limit on the gift tax exemption up to $1000000. There is a massive drop as the present exception is on $11700000 minus reported one-time gifts, which was above the annual exception amount, presently $15000 per person.
  • Set progressive estate tax rates and include a rate of 65% on properties of more than $1 billion. The current rate on estates over the valuation of $1billion is only 40%.
  • Capping on the valuation of discounts for the transfer of family businesses interest.
  • Change in the title of grantor trusts. The grantor trusts must fall under estate tax and not just income tax.
  • Require Grantor Retained Annuity Trusts (GRAT) must have a minimum of 10 years term and 25% of minimum value for remainder interest.
  • At the time of death, there is no step-up in the basis for the assets kept on hold in certain grantor trusts.
  • Start applying Generation-Skipping transfer tax (GST) to trusts that are longer than 50 years.

More on STEP Act by William D King

STEP Act is the Sensible Taxation and Equity Promotion Act. It is a proposal of tax legislation that would amend the basic income tax rules for estate planning. Let’s take a brief tour of the points:

  • Elimination of the step-up in the tax basis for the death of assets.
  • Shooting capital gain tax on unrealized appreciated assets due to the transfer of gifts or at the time of death. However, transfers that occur from raising charity and the death of a spouse will not trigger the capital gains under the STEP Act.
  • Appreciation of trust assets every 21 years for unrealized tax.
  • Capping on the exceptions and exclusions from capital gain tax and transfer of gifts.

A general explanation of the administration’s fiscal year 2022 revenue proposals, which elaborates the Biden’s Administration’s revenue proposals for the future. It came into the picture on 28th March 2021 by the US Department of the Treasury.

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