Here We Go Again!

It seems like it was only three months ago that we had a new law making the lifetime estate tax exemption $5.0 million indexed to inflation ($5.25 million in 2013).  Wait! It was only three months ago.

President Obama today release a 2014 budget proposal calling for changes to this “permanent” law.  Beginning in 2018, the budget would return the estate tax laws back to 2009 levels.  This would result in a $3.5 million lifetime exemption (not indexed for inflation) and a 40% tax rate.  This may also include the elimination of estate exemption portability since that was not in effect in 2009.

Based on assumed 3% inflation rate, we estimate that the current lifetime exemption would increase to $6 million in 2018.  If the President’s proposal goes into effect, about $2.5 million of additional estate value would be subject to a 40% estate tax.

The proposal also calls for certain “loopholes” to be closed.  Most likely these relate to discounts for private entity gifts and estate values and other related items (these “loopholes” are always in these types of budget proposals, but rarely get passed).

On the direct farming side, the President’s proposal, as expected, calls for the elimination of direct payments (saving about $3.3 billion per year ) and a reduction in crop insurance premium subsidies by about $500 million in 2014 rising to slightly more than $1.25 billion a couples years thereafter.

Paul Neiffer, CPA

 

 

  • Principal
  • CliftonLarsonAllen
  • Yakima, Washington
  • 509-823-2920

Paul Neiffer is a certified public accountant and business advisor specializing in income taxation, accounting services, and succession planning for farmers and agribusiness processors. Paul is a partner with CliftonLarsonAllen in Yakima, Washington, as well as a regular speaker at national conferences and contributor at agweb.com. Raised on a farm in central Washington, he has been immersed in the ag industry his entire life, including the last 30 years professionally. In fact, Paul drives combine each summer for his cousins and that is what he considers a vacation. Leave a comment for Paul. If you would like to leave a comment for Paul, follow the link above, however, please make sure to include your email address so that he can reply to your comment (your email address will not automatically show up).

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