Posted by:  Beth Cwik
October 21, 2015

The Internal Revenue Service recently announced the 2016 Inflation Adjustments in Revenue Procedure 2015-53.

  • ADJUSTED – Estate and Trust Tax Rate Tables – for taxable years beginning in 2016 the 15% rate applies to income not over $2,550 and the maximum 39.6% rate applies to income over $12,400 with graduated rates in between.
  • ADJUSTED – Valuation of Qualified Real Property in Decedent’s Gross Estate – for an estate of a decedent dying in calendar year 2016, if the executor elects to use the special use valuation method under § 2032A for qualified real property, the aggregate decrease in the value of qualified real property resulting from electing to use § 2032A for purposes of the estate tax cannot exceed $1,110,000.  The 2015 amount was $1,100,000.
  • ADJUSTED – Unified Credit Against Estate Tax – for an estate of any decedent dying during calendar year 2016, the basic exclusion amount is $5,450,000 for determining the amount of the unified credit against estate tax under § 2010. The 2015 amount was $5,430,000.
  • UNADJUSTED – Annual gift exclusion – for calendar year 2016, the first $14,000 of gifts to any person (other than gifts of future interests in property) are not included in the total amount of taxable gifts under § 2503 made during that year.
  • ADJUSTED – Annual gift exclusion for gifts to a spouse who is not a US Citizen – for calendar year 2016, the first $148,000 of gifts to a spouse who is not a citizen of the United States (other than gifts of future interests in property) are not included in the total amount of taxable gifts under § 2503 and § 2523(i)(2) made during that year.  The 2015 amount was $147,000.
  • ADJUSTED – Notice of Large Gifts Received from Foreign Persons – for taxable years beginning in 2016, recipients of gifts from certain foreign persons may be required to report these gifts under § 6039F if the aggregate value of gifts received in a taxable year exceeds $15,671.  The 2015 amount was $15,601.
  • ADJUSTED – Interest on a Certain Portion of the Estate Tax Payable in Installments – for an estate of a decedent dying in calendar year 2016, the dollar amount used to determine the “2-percent portion” (for purposes of calculating interest under § 6601(j) of the estate tax extended as provided in § 6166) is $1,480,000.  The 2015 amount was $1,470,000.
  • ADJUSTED – Net Investment Income Tax – for taxable years beginning in 2016, if a trust has undistributed Net Investment Income and also has adjusted gross income over $12,400 the investment income will be subject to the 3.8% Net Investment Income Tax. The 2015 adjusted gross income amount was $12,300.