On June 8, 2021, Ani Hovanessian was quoted in the Wall Street Journal on tax and estate planning in the wake of President Biden’s capital-gains tax proposal.
According to the article, the administration’s proposal features two interrelated parts to generate $322 billion over a decade. The first is the capital-gains rate increase on income over $1 million. The second changes the way capital gains are treated at death. The rate increase would take effect for sales of stock and businesses after the April 28 announcement of the plan. With some business sales already in process, that retroactive date has frozen some moves and could change what buyers are willing to pay.
President Biden’s plan to impose capital-gains taxes on assets held at death and on gifts as if they had been sold includes a $1 million per-person exemption. It would retain the existing exemption for gains on principal residences and deferrals for family-owned businesses and farms. Unlike the rate increase, the changes would take effect in 2022, creating a tax-planning opportunity before then.
Much of the potential tax planning being done as a result is preliminary because it takes place against an uncertain backdrop. With slim Democratic majorities in the House and Senate, Mr. Biden would need the votes of every Senate Democrat and almost every House Democrat to raise taxes on the top sliver of wealthy Americans.
Some Democrats have already expressed reservations about the proposal to raise the capital-gains tax. And any bill Congress does pass isn’t guaranteed to look exactly like the White House proposal, said Hovanessian. Among wealthy individuals, “there’s a lot of anxiety and nervousness that’s being generated by all the proposals,” Hovanessian said.
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