IRS Releases Some of the Inflation Adjustments for 2013

In Rev Proc 2012-41, 2012-45 IRB (Nov. 5, 2012), the IRS published the inflation adjustments in various tax features for taxable years beginning in 2013, including several key adjustments in features relating to estate planning. These adjustments include the following changes: (a) the gift tax annual exclusion will be $14,000 for 2013 gifts; (b) the gift tax annual exclusion for 2013 gifts to a non-U.S. citizen donee spouse will be $143,000; (c) the amount used to reduce the net unearned income reported on the return of a child subject to the “kiddie tax” and to determine whether a parent may elect to include the child's gross income directly in the parent's gross income in 2013 will be $1,000; (d) the alternative minimum tax exemption for a child subject to the “kiddie tax” will be $7,150 in 2013, plus the child's earned income for the taxable year; (e) the aggregate decrease in valuation that is possible through an election of special use valuation under Code Sec. 2032A with respect to a 2013 decedent is raised to $1,070,000; (f) the reporting threshold for 2013 gifts from certain foreign persons under Code Sec. 6039F is $15,102; and (g) the dollar amount used to determine the 2-percent portion
of the deferred estate taxes on closely-held business interests under Code Sec. 6166 with respect to the estate of a 2013 decedent is $1,430,000.