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New regs clarify rules for estate exemption portability provision

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in Small Business Tax,Small Business Tax Deduction Strategies

The “portability” provision in the federal estate tax provides greater flexibility in estate tax planning for married couples.

Alert: The IRS has issued new final regulations pertaining to the portability provision. (T.D. 9725, 6/12/15) Generally, the new regs follow previous proposed and temporary regulations but with certain modifications.

The final regulations are effective as of June 12, 2015, and apply to estates of decedents dying on or after that date.

Here’s the whole story: Under the American Taxpayer Relief Act of 2012 (ATRA), the unified federal estate and gift tax exemption was permanently locked in at $5 million, subject to annual inflation indexing, and the estate and gift tax rate was set at a flat 40%. (The estate tax exemption for decedents dying in 2015 is $5.43 million.) ATRA also preserved the portability provision allowing a surviving spouse to take over any unused exemption of the deceased spouse. This ...(register to read more)

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