Category: Estate and Gift
Tax Copyright 1998, The Tax Resource Group. All rights reserved. Telephone 800-578-3498. Internet: www.taxresourcegroup.com Issue Does the new law--The Taxpayer Relief Act of 1997--regarding the $1.3 million estate tax exclusion for family-owned business interests (IRC Section 2032A) affect the amount of such interests that may be gifted tax free? In other words, does this provision simply raise the unified credit for qualified business interests or is this provision for estate tax only? Answer The provision is for estate tax only. Gifts of qualified family-owned business interests are subject to the existing unified credit structure, now at $625,000 of effective exemption. The new law was put into place to avoid liquidation of family owned businesses in order to pay estate taxes. Since gifts are voluntary, there was no policy reason to increase the unified credit for gifts of such interests. |
