Taxation
Ca. Tax Lawyer OCTOBER 2018, VOLUME 27, NUMBER 3
Content
- 2018 Annual Meeting of the California Tax Bar and California Tax Policy Conference Sponsor Guide
- 2018 Meeting Eagle Lodge West
- A Cultural Compulsion to Share All Gives Way to a Passion for Confidentiality and Non-Disclosure in Tax Matters Section 7525 Federally Authorized Practitioner Privilege and the Work-Product Doctrine in Today's World
- A Request for Guidance and Relief from the Timely Reporting Requirement of Section 1.482-1(a)(3) of the Internal Revenue Regulations
- Advisors and Liaisons
- Amendment of Internal Code Section 152(e) in Order to Better Reflect Taxpayer Reality and Ensure Taxpayer Saftey
- Cla Staff
- Contents
- Executive Committee
- Helpful Suggestions for Improving Compliance with Information Regarding Beneficiaries Acquiring Property from a Decedent (Form 8971) and the Associated Basis Consistency Requirements
- Masthead
- Message from the Chair
- Standing Committees
- Tax Business
- Taxation Section 2017-2018 Leadership Directory
- Visiting the Committees
- An Uncertain Future: How the Potential Clawback Muddies the Estate and Gift Tax Waters
An Uncertain Future: How the Potential Clawback Muddies the Estate and Gift Tax Waters1
By Robin L. Klomparens and Kristin N. Capritto2
EXECUTIVE SUMMARY
The Tax Cuts and Jobs Act3 (the "Act") was signed by the president on December 22, 2017. Despite simplification of the tax code being one of the Act’s stated purposes, many of its provisions add complexity and ambiguity for both practitioners and taxpayers. This is particularly evident with respect to the Act’s changes to the estate and gift tax scheme. Thus, clarification on several issues would be helpful. This includes the potential for additional estate tax due because of lifetime gifts made by the donor.
Specifically, the possible sunset in 2026 of the increased estate and gift tax exemption amount leads to uncertainty and insecurity that the possibility that a gift previously made by a decedent will be "clawed back" into his or her estate if death occurs in a year in which the exemption amount is less than it was in the year the gift was made. Conversely, a concern for practitioners and taxpayers involves the loss of a credit against estate tax on a donee’s death with respect to previous gift tax paid by the donor during his or her lifetime when exemption amounts are increasing. Additional issues arise relative to the ordering of credit amount usedâif an individual makes a gift in a year with a higher credit amount and then the credit amount subsequently decreases, does that individual still have unified credit remaining? The answer depends on whether the credit amount is reduced from the top down or the bottom up.