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On January 20, 2021, Joseph Biden was officially sworn in as the 46th President of the United States.  So what does that mean for Estate/Gift and Fiduciary Income Taxes?  Proposals that President Biden has supported are as follows:

Estate/Gift Tax:

  • Estate/Gift Tax Exemption (currently tax year 2021 = $11,700,000) rolled back to pre-TCJA levels of $5,000,000 (indexed for inflation) or even to 2009 exemption of $3,500,000
  • Eliminate “step-up” basis of assets at date of death for beneficiaries
  • Valuation/discount limitations for lack of marketability/control, etc
  • Tax on appreciated assets at death
  • Tax rate increase (currently 40%)

Fiduciary Income Tax:

  • Maximum tax rate (currently tax year 2021 = 37%) of 39.6%
  • Eliminate favorable capital gains/qualified dividends rates (currently 20% maximum) to ordinary tax rates over certain income levels

There is no certainty as to the timing of and what portion of the above (if any) will make it into law.  With that being said, it is possible any changes could come as early as 2021.  Taxpayers should therefore begin planning, if they have not already, for the tax changes to come under the new Biden Administration by contacting their professionals and WilkinGuttenplan advisors.