While Republicans have made clear that they intend to repeal the estate tax entirely, they've said little about what they would replace it with — or whether they would replace it at all. Options include: Continuing the step-up in tax basis for inheritors; implementing a carryover tax basis system; or requiring that capital gains be paid upon death.
Both President Trump and House Republicans have proposed eliminating all itemized deductions, except for the mortgage interest deduction and deductions for charitable contributions. If enacted, this provision would have an impact on taxpayers in high income tax states, and would potentially offset some of the benefits of the lower overall federal income tax rate.
President Trump's most recent proposal calls for a 15% top tax rate for corporations and pass-through entities such as partnerships. That is much less than the top income tax rate for individuals, and there is concern that this could spur individuals to form pass-through entities in order to take advantage of the tax break.
Prior to the election, the U.S. Treasury proposed new regulations that aimed to eliminate valuation discounts for family limited partnerships and family LLCs. However, the Treasury received more than 10,000 comments against the proposed regulations, and President Trump's executive orders have all but ensured that they will not be enacted.
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