2020 Year-End Tax Guide

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FEDERAL TAX POLICY The politics of tax policy will be highlighted in 2021. With the election passed, a renewed battle over tax policy may be the focus of Congress and the White House. Due to the pandemic, the federal budget deficit has ballooned to more than $3 trillion. Regardless of party, revenue will need to be raised in order to pay for the pandemic relief. Here are some of the issues raised by the political campaigns, for which the country awaits answers: � Will the top income tax rate be increased? � What personal income level will become the highest bracket? � Will the capital gains rates increase? � Will the tax benefit of like kind exchanges survive? � Will decedents continue to receive a “step-up” in basis on estate assets?

WHAT WE KNOW FOR SURE For real estate owners and investors, there is a tremendous amount of uncertainty about the economy and tax policy under the next Administration. Here’s what we know for sure: 1. There is currently an $11,580,000 estate tax exemption per person, or $23,160,000 for a married couple. 2. Interest rates are at historically low levels. 3. The ability to utilize marketability and minority discounts still apply to closely held businesses. 4. The estate tax exemption will “sunset” in 2026. For taxpayers that have made real estate investments in partnerships or limited liability companies that are taxed as partnerships, 2020 is a “must” year to review estate planning. An open dialogue with your tax advisor regarding family goals, valuations, projected estate growth, hedging the step-up in basis issue at death, and all of the other components of an estate plan is a pressing need.

For real estate owners and investors, there is a tremendous amount of uncertainty. ”

Will there be a capital gains tax at death?

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What will be the estate tax exemption?

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