2020 Year-End Tax Guide

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For example: Assume a contractor’s estate is worth $15,000,000. Utilizing the current lifetime exemption, the approximate federal estate tax would be approximately $1,400,000. If this exemption reverts to pre-TCJA amounts, the same contractor’s estate would be subject to federal estate taxes of close to $3,600,000. If this contractor had only acted earlier, and gifted some assets or created trusts, etc., the contractor and his family could have saved approximately $2,200,000 in taxes. To make this planning even more beneficial, the above exemptions are doubled for married couples. That means for married couples, the current lifetime exemption is $23,160,000 which could produce tax savings of $4,400,000 if actions are properly taken before the law changes. There are many different structures that can be implemented to achieve this result, and the first step is to have the discussion with your trusted advisor about your long-term wishes and how best to structure your estate planning to meet these needs.

CORPORATE CHARITABLE DEDUCTION LIMIT

Calendar year 2020 has been filled with unfortunate news. During this year, charities have worked tirelessly to rise to the aid of many people in different situations. To help encourage corporate philanthropy, the IRS has temporarily increased the corporate charitable deduction limit from 10% to 25% of taxable income for 2020.

THE FINAL WALK-THROUGH The last few years have arguably contained more tax rule changes than the prior two decades and, as such, there are a myriad of items to consider. The above are some of the more notable and wide-reaching items with the potential to greatly impact contractors and should be at the forefront of their discussions with their trusted advisors. Please be sure to contact your Marcum tax specialist to discuss planning opportunities that can be taken now and how best to make the current tax landscape work for you.