Estate planning update for administration expenses
Article Abstract:
The US Supreme Court's recent decision on the 'Estate of Hubert' case changes the treatment of costs of administering an estate. These costs have historically been considered by the IRS to lessen the assets transferable to beneficiaries regardless of whether the estate's principal or its income was used to pay for the expenses. However, the Supreme Court's recent ruling establishes that posthumous administration costs do not automatically reduce transfers to beneficiaries. It holds that such expenses can be deducted from income without incurring estate tax obligations for the decedent under certain circumstances. To determine whether an estate qualifies for the 'Hubert treatment,' tax practitioners should compare administrative costs and the income produced by the estate's property, and identify state law and will provisions giving flexibility to the executor.
Publication Name: Taxation for Accountants
Subject: Business
ISSN: 0040-0165
Year: 1997
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Protective elections sustain estate tax-saving options
Article Abstract:
Business real estates that might meet thresholds for closely held business breaks under Sec. 2032A and Sec. 6166 should make protective elections with Form 706 US Estate Tax Return as originally filed. Under Sec. 2032A, an election may be made to decrease the value of the decedent's business real estate by as much as $750,000. Sec. 6166 also allows the election for a five-year delay in estate tax payments and for payments to be made as 10 annual installments. To qualify for these breaks, the relevant assets must be at least a certain percentage of the adjusted gross estate. Even if the required percentage thresholds are not met, executors should still consider making protective elections to protect the estate in the event of an IRS audit and revaluation.
Publication Name: Taxation for Accountants
Subject: Business
ISSN: 0040-0165
Year: 1997
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The new family-owned business estate tax exclusion
Article Abstract:
The new Section 2033A of the Taxpayer Relief Act of 1997 stipulates that estates that are comprised mostly of an interest in a family-owned business may be eligible to as much as $1.3 million estate tax exclusion. The new law takes effect beginning 1998.
Publication Name: Taxation for Accountants
Subject: Business
ISSN: 0040-0165
Year: 1997
User Contributions:
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