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Gift And Estate Tax Exemption Increase

 The tax-cut law significantly increased the amount of money that’s exempt from the estate and gift taxes, but only for 2018 through 2025. The exemption amount for an individual was $5.49 million in 2017, under the old tax code, and is $11.18 million in 2018. Stakeholders had questions about whether someone who made a large gift between 2018 and 2025 but then died after 2025 would have the gift subject to the estate tax at the lower-exemption level.

The IRS said that under the proposed rules, those who plan to make gifts between 2018 and 2025 could do so without worrying that they’ll lose the tax benefits of the higher exemption amount after 2025, when the estate tax changes in the Trump tax law are set to expire. The proposed rules would take effect once they are finalized.

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Uniform Application of Sec. 108 To Qualified Real Property Business Indebtedness (QRPBI)

 Real property developed and held by a taxpayer for lease in its leasing business is “real property used in a trade or business,” but real property held primarily for sale to customers in the ordinary course of business is not “real property used in a trade or business,” under Sec. 108(c)(3)(A).

Real property developed and held by a taxpayer for lease in its leasing business is “real property used in a trade or business” for purposes of Sec. 108(c)(3)(A). The COD income is excluded from gross income in the tax year of discharge, and the property’s basis is reduced by the same amount. On the contrary, real property developed and held by a taxpayer primarily for sale to customers in the ordinary course of business is not real property used in a trade or business for purposes of Sec. 108(c)(3)(A).

 

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