Tax Moves to Make before the Election
Regardless of your hopes for the upcoming election, it makes sense to help clients plan now for the possibility of significant change to the current tax code. If President Trump wins a second term, he has stated he will push to make permanent certain provisions in the 2017 Tax Cuts and Jobs Act (TCJA) that would otherwise expire in a few years. If, on the other hand, former Vice President Joe Biden wins the presidential race, we could very likely see sweeping change to the tax code.
Sean Weissbart, an attorney with Blank Rome in New York City, notes, “With the possibility of a hike in the capital gains tax rate, if Biden is elected, clients with appreciated assets may want to consider selling before year-end in order to lock in more favorable tax rates.”
“For high net worth investors especially, it makes sense to gift now rather than wait,” says Weissbart. “Clients have four months left in 2020 to use that higher exemption,” he says. Weissbart notes that gifting assets in 2020 could help in another way as well. “When making a gift, the asset is no longer on the client’s books, which provides two additional tax benefits: (1) the client will avoid gift and estate tax on all future appreciation of the gifted asset; and (2) if the recipient is in a lower tax bracket, the annual income earned on the asset will be taxed at a lower rate.
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“Tax Moves to Make before the Election,” by Bobbie Turner was published in ThinkAdvisor on September 16, 2020.