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Old 10-07-2015, 10:22 PM
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inheritance versus cap gains taxes

My Father's assets are being managed by a rep at one of the large brokerage firms. The rep suggested that we may want to pull out up to $14k per beneficiary per year (x3 = $42k) to avoid inheritance taxes. He suggested that we might do this prior to the end of 2015.

Would we incur other taxes such as cap gains? Would we incur cap gains both pre asset dispersal and post asset dispersal? If so, what is the inheritance rate versus cap gains? Trying to figure out if it is a good idea to wait from a tax perspective.



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Old 10-08-2015, 12:13 AM
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managed by a rep at one of the large brokerage firms. The rep suggested that we may want to pull out up to $14k per beneficiary per year (x3 = $42k) to avoid inheritance taxes. He suggested that we might do this prior to the end of 2015.=====>Not to avoid inheritance taxes but to avoid filing IRS form 709; If they gave gifts to each benefciiary in 2014-15 totalling more than $14K , annual gift tax exclusion amt, they must file Form 709.

Would we incur other taxes such as cap gains? >No I do not think so; as a recipient of the gift (not exceeding $14K), you do not need to pay any tax on the gift of $14K form 2014-15.


Would we incur cap gains both pre asset dispersal and post asset dispersal?=====>I think so;when the FMV exceeds the adjusted basis of the assets, then you can be subejct to LTCG taxes as I assume the assets are NOT biz use assets; Long-term capital gains are taxed at long-term capital gains rates, which is usually less than ordinary tax rates. The long-term capital gains tax rate is either zero % I fyour tax ratre is lower than 25%, and the rate is 15% if your marginal tax rate is higher than 15% or the rate is 20% if your tax ratre is 39.6% bracket.

If so, what is the inheritance rate versus cap gains? Trying to figure out if it is a good idea to wait from a tax perspective.==========>For federal level it is estate tax NOT inheritance tax; The estate tax in the United States is a tax on the transfer of the estate of a deceased person while when you inherit property from someone who lived in one of the US states with inheritance taxes I guess not all of the 50 states carry inheritance taxes,, you may end up paying some of your inheritance in taxes. So , you need to check it with the dept of reveneue of your state; Most estates don't owe federal estate or gift tax, because you can give away or leave substantial amounts of property tax-free.
The federal estate and gift taxes are really one tax, called the unified gift and estate tax. For deaths in 2015, you can leave or give away up to $5.43 M, total, before you need to pay tax. Tax liability isn't assessed until death, unless you make $5.43 M in taxable gifts (very unusual) during your lifetime. So most of the US citizens are NOT subject to gift/estate taxes



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