There was much speculation surrounding the fate of the federal estate tax leading up to the ultimate passage of the Tax Cuts and Job Act (TCJA) on December 22, 2017. Although the House of Representatives had proposed a repeal of the estate and generation skipping transfer taxes, the Senate proposed retaining the estate tax with modifications. The TCJA ultimately amended the Internal Revenue Code (IRC) to increase the lifetime exclusion for gifts and estates created after December 31, 2017, and before January 1, 2026, from $5,490,000 to $11,180,000. The annual gift tax exclusion was increased from $14,000 to $15,000, and the generation skipping transfer tax exemption was doubled. Heirs will continue to receive a step up in basis on inherited property. Similar to individual taxpayers, the estate and trust income tax rates were lowered for 2018 through 2025.
This month’s column explores free estate tax resources from the AICPA, the IRS, and others, to assist CPAs in providing estate tax planning services. Some materials do require a particular membership or the creation of an account to view. Readers should also be aware that some tax update tools, not highlighted in this column, were issued based on speculation about impending tax changes that did not actually come to pass.
The AICPA’s Tax Resource Library (https://www.aicpa.org/interestareas/tax/resources.html) includes several categories of materials available to tax section members, such as the Tax Reform Resource Center and Tax Season Resources for CPAs. The Tax Reform Resource Center (http://bit.ly/2vZb89J) includes downloadable slideshows for individual and business income tax changes and a flowchart for determining the new IRC section 199A qualified business income deduction. It also connects to several good AICPA webcasts, such as the January 2018 “Washington Tax Brief” (http://bit.ly/2I5FEDB).
The hidden jewels on the AICPA’s website are the several highly informative podcasts on estate tax and tax planning topics, which require only basic AICPA membership and can be located under the Resources tab on the Tax Reform Resource Center. The podcasts include suggestions for conversations with clients and planning opportunities and are a must-hear for any CPAs who work with individual taxpayers, even if they don’t specifically engage in estate planning services. “Tax Reform Impact on Planning” is a 50-minute interview with Steven Siegel that covers several topics, including estate, gift, and trust considerations, beginning at about 40:00 (Mar. 7, 2018, http://bit.ly/2HBERL6). “Tax Reform and the Estate Tax” is a podcast series addressing an overview of TCJA (8 minutes); individual income tax planning (22 minutes); asset protection planning (20 minutes); and estate, gift, and generation skipping planning (28 minutes) (http://bit.ly/2rbwN8L).
CPAs are probably familiar with the tax compliance kit and tax return routing sheet resources on the Tax Season Resources for CPAs webpage (http://bit.ly/2HHgdZS), which has several very useful resources available for nonmembers. A handy but somewhat hidden tool is the “Personal Financial Report Card,” which includes a checklist of estate and financial planning topics and can be found under the Related Resources tab (http://bit.ly/2rbPw46).
Another great item under the Related Resources tab is the “CPA’s Guide to Financial and Estate Planning,” by Sidney Kess and Steven Siegel, which is marked as restricted to PFP members (http://bit.ly/2jhzi63). “Chapter 42: Planning for the 99 Percent—How to Plan for Estates Under $5 Million” covers portability, income tax planning, life insurance, retirement benefits, and other topics, and is freely downloadable as a 24-page PDF (http://bit.ly/2r8o8VA). PFP section membership can be added for a relatively small cost and will open up access to the complete guide, as well as other PFP resources.
Related to the “Advisor’s Guide to Financial and Estate Planning,” is a 17-part video series by Steven Siegel that summarizes key points of the technical guidebook. The individual segments generally run 8 to 16 minutes in length and appear to be accessible without any login (http://bit.ly/2KlmxDL). Three offerings are specific to estate tax issues, including “Digital Estate Planning” (FEPG 07), which provides an extremely practical discussion of how to organize and make available to heirs information on computer and online user names and passwords under the Uniform Fiduciary Access to Digital Assets Act. “Overview of the Marital Deduction” (FEPG 08) covers the most important estate deduction, which is the tax-free transfer to a U.S. spouse, as well as effective strategies when the spouse is not a U.S. person. “Planning for Estate Liquidity” (FEPG 09) reviews strategies to manage liquidity to be able to pay off debts, taxes, funeral expenses, and other liabilities at death.
Internal Revenue Service
The IRS website (http://www.irs.gov) offers access to strictly compliance-related estate tax resources, which are located under the Businesses and Self-Employed section (https://www.irs.gov/businesses). Since the IRS has redesigned its website to be mobile- and consumer-friendly, and thereby less desktop- and professional-friendly, the following information may be helpful for CPAs. The best option for locating estate tax resources is to perform a keyword search, which will reveal the “Estate and Gift Taxes” main page and the table of contents to IRS estate and gift tax resources (http://bit.ly/2JBMD4s). The “What’s New—Estate and Gift Tax” webpage reports the estate tax exclusion amounts by year from 2004 through 2018 and the annual gift tax exclusion amounts from 2004 through 2018 (http://bit.ly/2Ft1SKo). The “Forms and Publications—Estate and Gift Tax” page includes links to Publication 559 on survivors, executors, and administrations in PDF and HTML formats, and PDF versions of Forms 706, 709, 1041, and others in a single location. It should be noted that Publication 559 covers 2017 tax returns, as they are still in the process of being filed (http://bit.ly/2HZV38u).
“The Year in Review: An Estate Planner’s Perspective on Recent Tax Developments” is a Bloomberg Tax Center Special Report that summarizes 2017 legislation, regulations, revenue rulings and procedures, court decisions, and selected other documents (Jan. 11, 2018, http://bit.ly/2HBPtK2). The 58-page resource is free, but does require registration. The reviews are organized by topic, such as tax reform, income taxes, estate taxes, gift taxes, generation skipping transfer taxes, and special valuation rules. The discussion material includes issue identification and planning suggestions in response to specific tax law pronouncements.
The RSM Tax Reform Center (https://rsm.us/2HBQfqq) offers access to RSM Tax Alerts (https://rsm.us/2I4reDE), which include three interesting recent articles on estate tax or planning topics. “Wealth Transfer Planning After TCJA: If Not Now, When?” provides several suggestions, such as using the increased exemptions to fix certain problems in a current estate plan, with specific examples given (Feb. 20, 2018, https://rsm.us/2KsDbBk). On a related note, “The Estate, Gift and GST Tax Exemption for 2018 is $11.18 Million” points out that the exemption is not the $11.2 million that planners were expecting and illustrates three scenarios where the difference matters (Mar. 6, 2018, https://rsm.us/2HGCgj5). Finally, “Questions at the Intersection of Choice of Entity and Estate Planning” offers some caveats to consider before converting a conduit entity into a C corporation for succession planning purposes (Mar. 16, 2018, https://rsm.us/2I8EZRI).
Handy Estate Tax Tools
Internal Revenue Service
Publication 559: Survivors, Executors, and Administrators (for 2017 tax returns)
2018/2017 Federal Estate and Gift Tax Tables
2018 Federal Tax Reference Guide
Estate Tax Calculator
Estate Tax Calculator
Estate Tax Calculator