Following is an update of the various federal tax issues, which are subject to federal adjustments, and should be factored into as part of your estate plan: A. The federal estate tax rate is permanently set at 40% per IRS Section 101(c)(1). B. The federal estate tax exemption for this year was increased under the Tax Cuts and Jobs Act (TCJA) to $13,610,000 per person and $27,220,000 per couple and is indexed for inflation through 2025. The exemption levels are set to revert back to $5,000,000 per person though in 2026, so long-term planning may be difficult. C. The long capital gains rates and step-up in basis are retained for now. The long-term capital gains tax rate is 15% for individuals with taxable income between $47,025 and $518,900 and for married couples between $94,050 and $583,750. The rate is 20% for individuals exceeding those levels. D. The annual gift tax exclusion increases to $18,000 per donor to each donee. E. The additional 3.8% Medicare Surtax which is assessed against net investment income for individuals with above an adjusted gross income of $250,000 for couples and $200,000 for singles remains in place. F. Nebraska Inheritance Taxes are paid to the county treasurer at different levels based upon who the heir is: (i) surviving spouses are exempt; (ii) parents, siblings, children and grandchildren pay tax at a rate of 1% on any monies they receive after the first $100,000; (ii) extended relatives like nieces/nephews/cousins pay tax at a rate of 11% for any monies they receive after the first $40,000; and (iv) non-related parties pay tax at a rate of 15% for any monies they receive after the first $25,000. I. In 2021 the House Ways and Means Committee (see House Report No. 117-130) removed the capital gains taxation trigger at death but proposed to revert the estate and gift tax exemption back to roughly $6,000,000 with the tax being imposed at a rate of 40%. The legislation was also designed to shut down Grantor Trusts as estate planning tools to avoid taxation. It also would do away with the benefits of special trusts like defective grantor trusts, dynasty trusts, grantor retained annuity trusts, irrevocable life insurance trusts, etc. The plan also would have removed the step-up in basis families receive on inherited assets exceeding $1,000,000. While this legislation did not pass, it is anticipated that it might be brought back up for discussion.
WHO NEEDS TO REPORT? Your entity may need to report information about beneficial owners if it is a corporation, a limited liability company (LLC), or was otherwise created by filing a document with a secretary of state. This is required by the enactment of the Corporate Transparency Act (CTA), which will be enforced by the Department of Treasury’s Financial Crimes Enforcement Network (FinCEN). More information is available on https://www.fincen.gov . WHAT DO YOU NEED TO REPORT? 1. The entity’s name, physical address, domestic state, and TIN or EIN. 2. The names and additi onal information of each “beneficial owner” of the entity and identifying information. WHEN DO I NEED TO REPORT? If your entity was created or registered prior to January 1, 2024 , you will have until January 1, 2025 to report BOI. If your entity was created or registered on or after January 1, 2024 , you will have 90 days from the dat e of creation for calendar year 2024 to file the BOI report. Beginning January 1, 2025 entities will only have 30 days from the date of creation to file the BOI report. Any updates or corrections to beneficial ownership information that has been previously filed with FinCEN must be submitted within 30 days of the change. WHO IS A BENEFICIAL OWNER? The rule describes a “beneficial owner” as any individual who, directly or indirectly, owns or controls a company, meeting at least one of two criteria: 1. Owning or controlling at least 25% of the ownership interest of the reporting entity; or 2. Exercising substantial control over the reporting organization. *Additional information regarding beneficial owners is avail able at www.fincen.gov/boi . WHAT IF I DO NOT REPORT? F ailure to comply with the CTA with reporting may lead to significant financial penalties - $591 per day civil penalty . HOW DO I COMPLY? Entities must report the required information through FinCEN’s website: https://boiefiling.fincen.gov/fileboir .
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An Organization of Professional Corporations
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