What You Should Know about Estate Planning and Gift Tax

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Gifting your business to heirs or other parties could result in substantial tax payments; estate planning helps you minimize the cost.

Our guest today is Ryan Moore from Riney Hancock CPAs, and he will help us look at how estate and gift taxes are applied as well as the best way to pass along the value of your business. Ryan has been in public accounting for almost a decade and currently specializes in tax planning and tax services. Riney Hancock CPAs have offices in Owensboro, Kentucky (right outside of Louisville) and Evansville, Indiana.

Key Points

  • Owners of closely held businesses can choose to transition over a period, giving away portions of the business incrementally.
  • Gift tax is incurred when you make a transfer without receiving anything in return.
  • Amounts up to $14,000 per taxpayer can be transferred tax-free each year.
  • The lifetime estate tax exemption is roughly $5.5million and includes IRAs.
  • If you transfer 50% of your business to your children in a single year, you have to file a gift tax return.
  • Estate planning is one more reason to get a business valuation.
  • If you gift stocks to your children during your lifetime, the tax basis will be the original cost and not the current market value.
  • Always make sure that your accountant, attorney, and financial advisor are all on the same page.
  • Keep an eye on the proposed tax reform to understand how it will affect you.
  • A few tips from Ryan to help you ask the right questions and make better decisions.

Join us for 20 minutes as we dive into this.

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