For those of you who want to get ahead of the planning curve for next year, Bloomberg BNA has pulled out the crystal ball and projected the inflation-adjusted amounts for income, estate, and gift tax thresholds and allowances, and exempt organization thresholds and penalties, for 2016. The crystal ball uses a derivative of the formula in §1(f)(3) and data from the Consumer Price Index. These projected inflation adjustments are designed to give tax preparers and advisers the opportunity to initiate tax preparation, year-end estimation, and tax planning as soon as possible.
These figures are adjusted for inflation annually. The full set of predictions can be found here. The IRS typically does not release the annual inflation adjustments until late October.
Income Tax of Trusts and Estates
For 2016, the taxable income thresholds on trusts and estates under §1(e) should be as follows:
If taxable income is:
Estate and Gift Tax
For decedents dying and gifts and generation-skipping transfers made in 2016, the basic exclusion amount, for purposes of determining the §2010(c) unified credit against estate tax, is $5,450,000.
The §2503(b) annual gift tax exclusion for gifts of current interest in property made in 2016 should remain the same at $14,000 per donee.
For gifts of current interest in property made to a non-citizen spouse in 2016, the annual gift tax exclusion under §2523(i)(2) should increase to $148,000.
Additionally, donees of gifts from certain foreign persons may be required to report these gifts under §6039F if the aggregate value of the gifts received in 2016 should exceed $15,671.
For estates of decedents dying in 2016, it is projected that the special use valuation method under §2032A for qualified property should not exceed $1,110,000.
For estates of decedents dying in 2016 extending payment of estate tax under §6166, the portion of the deferred estate tax subject to the two percent interest rate under §6601(j) should be $1,480,000.
For individuals losing U.S. citizenship in 2016, it is projected that an average annual net income tax of more than $161,000 for the five previous tax years is a covered expatriate for purposes of §877A(g)(1).
The amount that would be includible in the gross income of a covered expatriate under §877A(a)(1) should be reduced (but not below zero) by $693,000, for tax years beginning in 2016.
For the §6033(e)(3) reporting exception for certain exempt organizations with nondeductible lobbying expenditures, the annual per person, family, or entity dues threshold should be $112 or less in 2016.
The unrelated business income of certain exempt organizations under §513(h)(2) in 2016 should not include a low cost article of $10.60 or less.
For organizations receiving fully-deductible charitable contributions under §170 where the donor received insubstantial benefits in return, the inflation-adjusted guidelines of Rev. Proc. 90-12, 1990-1 C.B. 471, §3 should be $10.60, $53 and $106 in 2016.
Failure to File Certain Information Returns, Registration Statements, Etc.
The penalties under §6652(c) for certain exempt organizations and trusts failing to file returns, disclosures, etc., which are required to be filed in calendar year 2016, should be:
(1) Annual returns under §6033(a)(1) or §6012(a)(6)
(2) Returns under §6034 or §6043(b)
(3) Disclosure Under §6033(a)(2)
So now you can either wait until the IRS announces the adjusted amounts or start getting ready for your end of the year planning.
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to firstname.lastname@example.org.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).
This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to email@example.com.
Put me on standing order
Notify me when new releases are available (no standing order will be created)