Now that we’re well into the New Year, taxpayers should know 2017’s inflation adjustments for several tax provisions set forth in Rev. Proc. 2016-55. These adjustments apply to tax years beginning in 2017 and transactions or events occurring during the 2017 calendar year. Many affect estate planners and expatriates.
*The 2017 taxable income thresholds on trusts and estates under § 1(e) are:
| If Taxable Income is: | The Tax is: |
| Not over $ 2,550 | 15% of the taxable income |
| Over $ 2,550 but not over $ 6,000 | $ 382.50 plus 25% of excess over $ 2,550 |
| Over $ 6,000 but not over $ 9,150 | $1,245.00 plus 28% of excess over $ 6,000 |
| Over $ 9,150 but not over $12,500 | $2,127.00 plus 33% of excess over $ 9,150 |
| Over $12,500 | $3,232.50 plus 39.6% of excess over $12,500 |
*The 2017 alternative minimum tax exemption amount for estates and trusts under (§55(d)(1)(D)) is:
| Filing Status | Exemption Amount |
| Estates and Trusts ((§ 55(d)(1)(D)) | $24,100 |
*The phase out amounts of alternative minimum tax for estates and trusts under (§ 55(d)(3)(C)) are:
| Filing Status | Threshold Phaseout | Completed Phaseout |
| Estates and Trusts ((§ 55(d)(3)(C)) | $80,450 | $176,850 |
*For decedents dying and gifts and generation-skipping transfers made in 2017, the basic exclusion amount, for purposes of determining the § 2010 credit against estate tax, is $5,490,000. The calculated credit generated by the § 2010 or § 2505 inflation-adjusted basic exclusion amount is $2,141,800 for 2017 decedents or gifts.
The § 2503(b) annual gift tax exclusion for gifts of current interest in property made in 2017 stays the same at $14,000 per donee. For gifts of current interest in property made to a non-citizen spouse in 2017, the annual gift tax exclusion is $149,000 under § 2523(i)(2) .
Additionally, donees of gifts from certain foreign persons may be required to report these gifts under §6039F if the aggregate value of the gifts received in 2017 exceeds $15,797.
For estates of decedents dying in 2017 that elect to use the §2032A special valuation method for qualified property, the aggregate decrease in value must not exceed $1,120,000.
For estates of decedents dying in 2017 that elect to extend the payment of estate tax under §6166, the 2% portion for determining the interest rate under §6601(j)is $1,490,000.
*For individuals losing U.S. citizenship in 2017, an average annual net income tax of more than $162,000 for the five previous tax years is a covered expatriate for purposes of §877A(g)(1). For 2017, the amount that would be includible in the gross income of a covered expatriate under §877A(a)(1) is reduced (but not below zero) by $699,000.
*For exempt organizations, the §6033(e)(3) reporting exception for certain exempt organizations with nondeductible lobbying expenditures, the annual per person, family, or entity dues threshold is $113 or less. For §501(c)(5) agricultural and horticultural organizations, the §512(d)(1) limitation for exemption of annual dues required to be paid by a member is $162. The unrelated business income of certain exempt organizations under §513(h)(2) does not include a low cost article of $10.70 or less. For organizations receiving fully deductible charitable contributions under §170 where the donor received insubstantial benefits in return, the inflation-adjusted guidelines of Rev. Proc. 90-12, 1990-1 C.B. 471, §3 are $10.70, $53.50, and $107.
It is wise for individual and business taxpayers located in the Tri-State area to consult with a tax professional to answer any tax-related questions during 2017, call THE TAX EXPERTS at the Thorgood Law Firm www.thorgoodlaw.com. For a FREE consultation call 212-490-0704.
