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Your Money Is Ours

dem-2016-clintonHillary Clinton announced an updated estate tax proposal today. After previously supporting an increase in the estate tax rate from 40% to 45% and decreasing the amount of tax free assets to $3.5 million, she now wants to tax estates exceeding $10 million at 50%, estates exceeding $50 million at 55%, and estates exceeding $500 million at 65%. She also wants to remove the stepped up basis provision for estates so appreciated assets would also be subject to capital gains tax at death.

Two quick points without being too political because the proposal speaks for itself:

1. Apparently Hillary believes the Senator Warren adage that “you did not build this” so we are going to tax it mantra.
 
2. No word from her billionaire buddies Soros, Zuckerberg, Gates, and Buffet on how they feel about the government possibly taking 65% of their wealth and, frankly, I don’t give a damn about them.
 

Two Halves Do Not Make a Whole?

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Stepping away from celebrities for a minute and focusing on estate laws, yesterday the IRS issued proposed regulations to minimize valuation discounts in estate planning. In a nutshell, the regulations prohibit taxpayers from dividing property between family members and then claiming their proportionate shares are not worth the exact proportion because that small proportion does not have control of the property. Wonky? Yes.

 
Three small points:
1. These regulations have been bandied about for 25 years.
2. From a practice viewpoint, I have never completely bought into the idea of valuation discounts for marketable securities transferred to an LLC or partnership solely for the purpose of obtaining a reduced value for estate tax purposes.
3. Nonetheless, this issue seems to be one for Congress to address through legislation rather than one more edict from a lame duck (re: imperial) administration to issue in its waning days.
 

Hey, New Jersey, Your Tax Base Is Too Narrow

davidtepper

David Tepper is a hedge fund manager whose company is located in New Jersey.  He is also a resident of the Garden State (misnomer alert). He recently announced that he was moving his corporate headquarters and his personal residence to Florida.  The NJ state budget director then stated that this move could affect the amount of tax revenues generated by NJ.  

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Feel the Burn?

3izqaim1Last week Bernie Sanders released his tax increase plan for paying for his $1.4 trillion annual single payer health care plan. Among other hefty increases, his plan would increase the estate tax on the “wealthiest .3% of Americans who inherit more than $3.5 million” to raise an additional $21 billion annually.

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Pistons, Lightning, Shock, and Fury

William Davidson was the owner of the Detroit Pistons, Tampa Bay Lightning, and Detroit Shock (WNBA). When he died in 2009, he was listed as the 62nd richest man in the U.S. His estate recently settled litigation with the IRS over the amount of estate taxes owed. The IRS claimed that the estate owed an additional $2.8 billion (yes, with a B) in estate taxes. The dispute involved the value of closely held stock transferred to various trusts. The estate settled for $388 million.

Points, if I must:

1. I would call this a victory for the estate given that the IRS was seeking 7X more than the settlement amount.

2. Of course, it is never a victory for the family when they had already presumably paid more than $1 billion in estate taxes and were fighting over the incremental taxes.

3. All of this begs the question about how much estate tax is enough from one individual. If Democratic candidate nee Socialist Bernie Sanders were president, Davidson’s tax bill would have been $1 billion more.

4. Last, if one owns a professional sports team, or three, good estate planning advice is essential.

WNBA Finals Game 1: Sacramento Monarchs v Detroit Shock

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All Posts By Jay Brinker

I am an attorney located in Cincinnati, Ohio who practices in the areas of estate planning, probate, asset protection, and small business advice. I make a difficult and bewildering process as simple as possible. Most importantly, I provide "more for less" for my clients.