IRS Anti-Clawback of 2017 Exemption

On November, 22, 2019, the IRS released the final regulations regarding the potential “claw-back” of the increased exemption amount used before a client’s death. As provided under Treasury Regulations Section 20.2010-1(c), in the event an individual took advantage of the 2017 Tax Act’s increase exemption and died after the proposed sunset scheduled for January 1, 2026, the regulations provide that such use of the increased basic exemption will not result in the decedent being treated as having made adjusted taxable gifts on the decedent’s estate tax return. Please fee free to contact our office for more information regarding this issue as well as deceased spousal unused exclusion amount and potential generation-skipping tax effects.