QOW: On Unpleasantness

No taxes can be devised which are not more or less inconvenient and unpleasant.

— George Washington

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Increased Estate Tax Exemption for 2018

target-clipart-target-clipart-1Official numbers from Treasury will not be released until late October, but here are my projections for 2018 estate and gift tax exclusion amounts:

  • The Basic Exclusion Amount (IRC §2010(c)(3)) used to compute the Unified Credit Against Estate Tax will probably be $5,600,000; this would be an increase of $110k (or 2.75%) over 2017’s exclusion amount;
  • This Basic Exclusion Amount of $5,600,000  is equivalent to a Unified Credit of $2,185,800;
  • The Gift Tax Annual Exclusion amount (IRC §2503(b)) should increase to $15,000; this will be the first increase since 2013. The gift tax annual exclusion is rounded down to the nearest multiple of $1,000. Any guesses on how long until the next increase in the annual exclusion?

These predictions assume that Congress makes no changes to the estate and gift tax laws before the end of the year.

Trust (& Estate) Returns – Extended Due Dates

Trusts (and calendar year estates) on extension are due two weeks later this year than last year.

Back in 2015, the Surface Transportation and Veterans Health Care Choice Improvement Act (H.R. 3236) (“the Act”) made material changes to tax return due dates. Specific to the fiduciary income tax arena was the change in the permitted extension period. Previously, extensions granted to trusts and estate were for 5 months; now extensions are for 5 1/2 months. This change is effective this year; specifically for tax years beginning after 12/31/2015, which means 2016 tax returns which are due in 2017.

Treasury has recently issued updated regulations (T.D. 9821) to conform to the time period per the Act (see T. Reg. §1.6081-6T(a)(1)).

The IRS provided an extension form last winter (Form 7004) that provided for the 5 1/2 month extension; however the regulations were not updated until last month (7/18/2017).


Actually, trusts (and calendar year estates) get a few extra days this year: because 9/30/2017 falls on a Saturday, returns can be timely filed on Monday 10/2/2017.

Multiple Trustees Statement

It is common for trusts to have multiple trustees, but it is very uncommon for fiduciary income tax returns to have attached the statement required when a trust has multiple trustees.

IRC §6012 lays out the filing requirements of for individuals, corporations, estates, and trusts. Subsection (b) defines some specific rules for “Fiduciaries and Receivers”.

IRC §6012(b)(5) states specifically that only one fiduciary is required to file a return (when there are multiple fiduciaries). And it requires a statement:

“… that the fiduciary has sufficient knowledge of the affairs of the person for whom the return is made to enable him to make the return, and that the return is, to the best of his knowledge and belief, true and correct.”

The regulation §1.6012-3(c) basically repeats the statutory language above, without providing any additional guidance.


Has anyone every filed a statement along with Form 1041?