Wednesday, September 19, 2012

AICPA urges Congress to quickly fix tax cliff

AICPA urges Congress to quickly fix tax cliff (JEH: I've shared several links regarding the imminent changes to the federal transfer (estate/gift/GST) tax system unless additional legislation extends the 2010 tax provisions. Advisors and commentators are offering plenty of suggestions on considering whether to use the $5.12 million exemption before it reverts to essentially a $1 million exemption as of January 1, 2013. These numbers are still significant, but these rules can relatively easily ensnare folks who have no idea about them. For example, the entire value of life insurance could push a decedent's taxable estate well above $1 million after considering the value of his or her principal residence and other assets. Try sharing with that family that they owe 55% of every dollar above $1 million to the federal government! Small business owners represent another unsuspecting group because they often view their businesses as worth far less than others, including the government, would appraise the value. Political leaders rarely approach any problem in a proactive manner. Hopefully they will use a different tack here. Otherwise, plenty of people who have already been adversely affected by downturns in the real estate market, the stock market, and the status of their pension/retirement accounts (if anything remains there) might face yet another slashing of the assets that they worked diligently to obtain and cultivate.)