There are several proposals to repeal the estate tax currently percolating in Congress. None of these proposals appears to have been fully fleshed out, and it is unclear how the differences will be reconciled. Notably, none of the proposals reflects the Trump campaign position supporting a “mark to market” tax to be imposed at death. Below is a brief summary of the currently proposed legislation, and the key differences between them.
H.R. 451: Known as the “Permanently Repeal the Estate Tax Act of 2017,” this bill is the shortest. It states simply that for “decedents dying after December 31, 2016, Chapter 11 of the Internal Revenue Code of 1986 is repealed.” This operates to repeal the estate tax, but to leave the gift tax and generation-skipping transfer tax in place.
H.R. 198: Called the “Death Tax Repeal Act of 2017,” this bill goes much further and repeals Subtitle B of the Internal Revenue Code, which includes estate, gift and generation-skipping transfer tax. The bill also states that it would be effective upon enactment, rather than retroactive.
H.R. 631 and S.B. 205: Both of these bills have multiple co-sponsors and each of them is known as (you guessed it) the “Death Tax Repeal Act of 2017.” These bills are somewhat longer and repeal the estate and generation-skipping transfer taxes, but retain the gift tax at a top rate of 35%. They also maintain the taxation of existing QDOTs for 10 years. Finally, each of these bills is effective upon enactment.
It is uncertain what features any final legislation will include. However, it is clear that now is a good time to remind clients of all of the excellent non-tax reasons for their planning.