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ASSET Act Could Delay Estate Tax

Posted on: January 12th, 2015
estate taxThe American Solution for Simplifying the Estate Tax Act of 2014 (ASSET) H.R. 5872 was introduced to the House of Representatives in mid-December 2014. The Act is structured for business owners, which would allow taxpayers to pay an additional 1% income tax during their lives that would permit deferral of estate tax.

Generally, estate taxes are due within nine months of the decedent’s date of death. The ASSET Act proposes that individuals who pay a 1% surtax for at least seven years could postpone estate tax payments until the estate is sold. The surtax would virtually pre-pay estate tax so that the burden is not as severe at death.

The additional tax would not be mandatory. If the Act is passed into law, business owners can consult with a tax attorney to learn if paying the surtax would be advantageous and if tax plans should be revised.

The federal estate tax exemption for the 2015 tax year is $5.43 million, and the top federal estate tax rate is 40%. Although the ASSET Act would not necessarily minimize the estate tax burden, it could simplify what is sometimes a complicated tax debt satisfaction process. Currently, without the provisions of the ASSET Act, surviving family members of a decedent who owned a business might be forced to break up the business or liquidate business assets in order to pay estate taxes on time. The Act could prevent business interruption, loss, retain employees, and preserve the longevity of companies. Business assets could pass on to heirs or designated beneficiaries without a new tax requirement. It is especially attractive to family businesses where the livelihood of surviving family members could be at risk when a business owner dies.

The ASSET Act, if passed, could prompt many taxpaying business owners to revise their tax plans and business succession plans. Our tax attorneys review business succession plan strategies and other tax breaks for businesses. Curious about how lawmakers will respond to the proposed Act? Follow our tax attorneys on Facebook and Twitter for updates on legislation.
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