www.qns.com i LIC COURIER i FEBRuary 2017 43
Tax Tip
What
to Expect
When
You’re Filing
By John Savignano
Repeal of the Estate Tax
If the estate, gift and generationskipping
taxes become a thing of
the past, where do estate and gift
tax advisors focus their efforts? That
all depends upon what fills the void
in the event of repeal. If Congress
also eliminates the step-up basis for
inherited assets, then there may be a
new regime of carryover basis rules
or year-of-death income tax assessment
on unrealized gains. In any
event, such a significant transition
will require both the IRS and family
wealth planning professionals to
prepare for a serious shift in focus
over the coming years.
Flow-through Entities
It is unclear whether President
Trump’s proposed 15% business tax
rate will apply to flow-through income,
guaranteed payments, and compensation
from businesses to their owners.
If any distinction is drawn that might
favor the retention of earnings within
the business entity, tax advisors will
have to focus more on reasonable
compensation and debt/equity issues
involving businesses and their owners.
Greater IRS scrutiny should also be
expected.
More Streamlined Audits
It’s expected that Congress will thin
out the number of available business
deductions and credits, such as those
for historic preservation, research, energy,
conservation easements, and
local economic development. These
trends will likely result in IRS audits
that are narrower in scope but more
focused and detailed on the issues
targeted.
John Savignano is a partner with Savignano,
Accountants & Advisors located
at 47-46 Vernon Blvd., second floor,
in Long Island City. For questions dail,
718-207-0955.
John Savignano
