(Photo: Allison Bell/ALM)
The Treasury Department and Internal Revenue Service issued final regulations Friday confirming that individuals taking advantage of the increased gift and estate tax exclusion amounts in effect from 2018 to 2025 will not be adversely impacted after 2025 when the exclusion amount is scheduled to drop to pre-2018 levels.
The final regs, Treasury Decision 9884, implements changes made by the Tax Cuts and Jobs Act enacted in December 2017.
The final regs largely adopt the proposed regulations published last November, but they also include clarifying technical language addressing concerns raised in several public comments as well as four examples which, among other things, illustrate the impact of inflation adjustments, the IRS explained.
As a result, individuals planning to make large gifts between 2018 and 2025 can do so without concern that they will lose the tax benefit of the higher exclusion level once it decreases after 2025.
As the IRS explains, gift and estate taxes are calculated, using a unified rate schedule, on taxable transfers of money, property and other assets. Any tax due is determined after applying a credit – formerly known as the unified credit – based on an applicable exclusion amount.