The IRS has issued Rev.Proc 2022-38. The purpose is to set forth inflation-adjusted items for 2023 for various IRS Code provisions. Of particular interest to people involved in the estate planning field are (1) the new unified credit against estate tax (which affects the gift and GST exemptions as well); (2) the change in the maximum reduction in valuation of qualified real property under Section 2032A; (3) the increase in the annual exclusion for gifts under Sections 2503 and 2523; (4) the increase in the so-called 2-percent portion of the estate tax payable under Sections 6166 and 6601; (5) the threshold amount for the maximum tax rate bracket for trusts and estates; and (6) the exemption amounts under Section 55 (for phaseouts).
The unified credit against estate tax, which also affects the gift and GST exemptions, will increase from $12,060,000 to $12,920,000 for year 2023.
The election under Section 2032A provides for a decrease in value of qualified real property and the new maximum decrease will be $1,310,000.
The annual gift exclusion will jump another $1,000 this year, from $16,000 to $17,000. The first $175,000 of gifts to a spouse who is not a citizen of the United States (other than gifts of future interest in property) are not included in the total amount of taxable gifts under Sections 2503 and 2523(i)(2).
The so-called 2-percent portion under Sections 6166 and 6601 will be $1,750,000.
When it comes to income taxes, the maximum 37% tax bracket applicable to estates and trusts will kick in at $14,450.
The maximum “zero rate amounts” and “maximum 15-percent rate amounts” for estates and trusts will be $3,000 and $14,650, respectively.
The exemption amounts for alternative minimum tax for estates and trusts will be $28,400.
The amounts used under Section 55(d((2) to determine the phaseout of the exemption amounts will be $94,600 for the threshold, and $208,200 for the complete phaseout amount.
If you would like a copy of the Revenue Procedure, please email me and I will send a copy to you by return email.