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Scottsdale Tiger's post RE: capital gains leaves out...
Posted on: April 27, 2021 at 07:57:55 CT
Gyro MU
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an important aspect of the analysis.
First, his example omits any discussion of the current lifetime gifting limits under current federal tax law. Right now that is $11.7 million and that's PER SPOUSE. So in his example, some decent tax planning removes any whiff of federal capital gains.
Now, these large exemption amounts sunset in 2026 and they could of course be changed at any time by Congress. But, and this is important, the exemption amounts even before 2017 and Trump's tax changes were $5 million and change PER SPOUSE.
Also and this is particular to people running farms, there comes a time when farmers are not able to keep up with the physical requirements of running a farm. Many farms are run as Family Limited Parternships and as farmers get older, they transfer some ownership, and often, an increasing amount of ownership to family members. If they don't have any there are a number of tax sheltering entities that can be formed to offset and pre-plan for things like high income taxes, capital gains and estate tax.
One last thing: Farming is notorious for giving people a high income with a lot of illiquid assets, primarily property. Land rich, cash poor is the term. But at the same time, their unique position as farmers allows them many deductions and offsets, which can only usually be fully taken advantage of with the help of professionals, largely CPA and tax lawyers. So they understand the value of professional advice and take full advantage. In other words, all of these proposed tax laws don't go on the books (assuming they ever get passed in the first place) in a vacuum.
First, his example omits any discussion of the current lifetime gifting limits under current federal tax law. Right now that is $11.7 million and that's PER SPOUSE. So in his example, some decent tax planning removes any whiff of federal capital gains.
Now, these large exemption amounts sunset in 2026 and they could of course be changed at any time by Congress. But, and this is important, the exemption amounts even before 2017 and Trump's tax changes were $5 million and change PER SPOUSE.
Also and this is particular to people running farms, there comes a time when farmers are not able to keep up with the physical requirements of running a farm. Many farms are run as Family Limited Parternships and as farmers get older, they transfer some ownership, and often, an increasing amount of ownership to family members. If they don't have any there are a number of tax sheltering entities that can be formed to offset and pre-plan for things like high income taxes, capital gains and estate tax.
One last thing: Farming is notorious for giving people a high income with a lot of illiquid assets, primarily property. Land rich, cash poor is the term. But at the same time, their unique position as farmers allows them many deductions and offsets, which can only usually be fully taken advantage of with the help of professionals, largely CPA and tax lawyers. So they understand the value of professional advice and take full advantage. In other words, all of these proposed tax laws don't go on the books (assuming they ever get passed in the first place) in a vacuum.
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Scottsdale Tiger's post RE: capital gains leaves out... - Gyro MU - 4/27 07:57:55
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