Super Committee May Target Gift and other Transfer Tax Exclusion Amounts
As we have mentioned in previous alerts, legislation passed in December 2010 provides that you may give up to $5 million in 2011, and up to $5,120,000 in 2012, free of gift tax (or up to twice those amounts if you elect to “split gifts” with your spouse), less certain prior gifts. This gift tax exemption is a temporary provision and is slated to return to $1 million in 2013.
Currently, there is some speculation that the Joint Committee on Deficit Reduction (also known as the Super Committee), which has been charged with reducing the current deficit by $1.5 trillion, may propose a reduction of the gift exclusion amount to $1,000,000 prior to 2013. The Committee must report its recommendations by November 23rd.
While we believe it is unlikely that such a proposal will be made, if you are considering making gifts this or next year to take advantage of the higher gift tax exclusion, you may wish to proceed at this time.