Clawback of the Gift Tax

Frank J. O'Connell Jr. of Crowe Horwath LLP recently published an article that discusses how a taxpayer who is considering making a $5 million dollar tax-free gift in 2011 or 2012 might be concerned that either an additional gift tax will be assessed at the time a subsequent gift is made or an additional estate tax will be imposed upon death.  The current law increased the lifetime gift tax exclusion from $1 million dollars (as it had been since 2002) to a full $5 million dollars for 2011 and 2012.  Mr. O'Connell advises that even if the benefit of making tax-free gifts in 2011 and 2012 is recaptured, the exhibits show that this merely puts taxpayers back in the same position they would have been in anyway.

See Frank J. O'Connell Jr., Clawback of the Gift Tax, AICPA.org, Sept. 1, 2011.

Posted by William Alan Nelson II, Associate Editor, Wealth Strategies Journal