Legislation discussed, but not likely to pass:
Repeal of stepped up basis
Capital gains tax increase to 39.6% top bracket
Legislation possible to pass:
Elimination or alleviation of the SALT deduction cap, especially driven by states with higher state and local tax
Legislation more likely to pass:
Pass through section 199(a) business income deduction of 20% Æ limited to $500,000 on a joint return, $400,000 on an individual
Backdoor Roth IRA eliminated entirely, not just for the “wealthy”
RMD for aggregate IRA balances over $10M Æ distribute 50% of balance above $10M
IRAs prohibited from holding private equity
Reduce estate tax exemption from $11.7M to $5M-$6M (married filing jointly)
Remove minority stock discount
Corporate tax rate to increase from 21% to 25-26%
New multinational corporate minimum tax rate of 16.5%, to curb the use of more tax-friendly jurisdictions
Questions for high income earners to consider, based on the above:
Should you accelerate your gifting to heirs while the estate tax exemption is higher?
Should you do back door Roth conversions sooner while you still can?
Should you sell your business on an installment sale schedule to mitigate capital gains tax treatment?
Should you stack your charitable contributions (for example, by using a donor-advised fund) into this year or the next year, and take the standard deduction for the other year?
Married clients: should you consider a second to die contract to help offset the future cost of taxes on a business sale or IRA transfer?
Should you look to gift from your IRA and replace the inheritance to heirs with a life policy?
Like we said, that’s a quick hit summary. If there is something here that we should discuss, let’s get to it!
There is no guarantee that these statements, opinions or forecasts provided herein will prove to be correct. This material is being provided for information purposes only. Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation. Please note, changes in tax laws may occur at any time and could have a substantial impact upon each person's situation. While we are familiar with the tax provisions of the issues presented herein, as Financial Advisors of RJFS, we are not qualified to render advice on tax or legal matters. You should discuss tax or legal matters with the appropriate professional.