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Consuelo Mack's WealthTrack: Guest: Elda Di Re, EY National Tax Department
FYI: It’s been three decades since the last game-changing tax reform legislation was passed. Washington is in the midst of another major tax overhaul effort now with huge implications for many. In an exclusive follow-up discussion with EY’s Elda De Ri, we tackle the possible ramifications and actions to consider before year-end. Regards, Ted http://wealthtrack.com/taxing-consequences-what-you-need-to-know/
Is this where "re-gifting" finally loses it's negative connotation?
Estate planning moves main stream (...not really):
No way I will ever challenge the present $5M nor the proposed $10M limit, but why not sell assets keeping the new tax proposal (stepped up basis provision for transfer of estate) in mind.
So, if I have 100 shares of xyz stock that I need to sell for income. Instead of selling them from my taxable portfolio and paying the taxes on the capital gain, I instead, gift them "in kind" to my family member first. -They receive the gift (with a stepped up basis), -They then sell the xyz stock at the stepped up basis price, -They pay no taxes on the capital gain since it was eliminated when I first gifted xyz stock to them, -They then "re-gift" the proceeds back to me (cash proceeds)...minus a steak dinner and a few nights of sleepovers for the grand kids.
This sounds a lot like how a Roth IRA works, but better. It doesn't have pedestrian contribution limits ($20M for a couple), no withdrawal (age) limits, nor any Roth conversion costs (income tax).
"No step up except at death", or except for the 1/2 community property owned by the still living spouse.
In most states, when one spouse dies, that spouse's share of jointly owned property gets a step up, but the surviving spouse's share doesn't. If that property is owned as community property, then all of it gets a step up.
Comments
Estate planning moves main stream (...not really):
No way I will ever challenge the present $5M nor the proposed $10M limit, but why not sell assets keeping the new tax proposal (stepped up basis provision for transfer of estate) in mind.
So, if I have 100 shares of xyz stock that I need to sell for income. Instead of selling them from my taxable portfolio and paying the taxes on the capital gain, I instead, gift them "in kind" to my family member first.
-They receive the gift (with a stepped up basis),
-They then sell the xyz stock at the stepped up basis price,
-They pay no taxes on the capital gain since it was eliminated when I first gifted xyz stock to them,
-They then "re-gift" the proceeds back to me (cash proceeds)...minus a steak dinner and a few nights of sleepovers for the grand kids.
This sounds a lot like how a Roth IRA works, but better. It doesn't have pedestrian contribution limits ($20M for a couple), no withdrawal (age) limits, nor any Roth conversion costs (income tax).
David
In most states, when one spouse dies, that spouse's share of jointly owned property gets a step up, but the surviving spouse's share doesn't. If that property is owned as community property, then all of it gets a step up.