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Alert: Proposed regulations avoid potential gift/estate tax “clawback”

December 14, 2018 Article 3 min read
Authors:
Mandy Chardoul Wealth Management Dawn Jinsky Wealth Management James Minutolo
Recently proposed regulations clarify that there will be no “clawback” of gift or estate tax after the increased gift/estate tax exclusion sunsets in 2026. People with potentially taxable estates should consider making gifts to utilize the increased exclusion amount before it expires.

Business people sitting around a table looking at a presentation.

Recent regulations from the IRS provide much-needed clarity for taxpayers who make large gifts to utilize the increased gift and estate tax applicable exclusion amount enacted as part of the Tax Cuts and Jobs Act (TCJA) before it sunsets in 2026.

 Because of the temporary nature of the increased exclusion amount, there was concern that taxpayers who utilized some, or all, of the increased exclusion amount to shelter gifts prior to 2026, but passed away after 2026, might have an estate tax imposed on transfers that were previously sheltered from gift tax by the enhanced exclusion amount. The exciting news is that these regulations prevent the application of such a “clawback.”

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