Estate Planning Law Changes Concerning Estate and Gift Tax, the $100,000 IRA Charitable Rollover and Inherited Basis Reporting Requirements

By: David J. DelFiandra, Esq.

Estate and Gift Tax

The IRS has announced that for calendar year 2016, the lifetime unified credit against the Federal estate and gift tax will increase to $5,450,000 per person. This is an increase of $20,000 per person over the 2015 credit of $5,430,000 per person.

In general, any U.S. Citizen or permanent resident who transfers assets in excess of the unified credit (during life or at death) will be taxed at a rate of 40% on such excess transfers.

The annual gift tax exclusion for 2016 will remain unchanged at $14,000 per donee. A gift of a present interest during life that does not exceed $14,000 will not be considered a taxable gift and does not count against the $5,450,000 unified credit.

$100,000 IRA Charitable Rollover Made Permanent

Under the Protecting Americans From Tax Hikes Act of 2015 (“PATH”), the $100,000 IRA Charitable Rollover is now permanent. This provides an annual exclusion from gross income of up to $100,000 for qualified charitable distributions from an IRA. The provision only applies to individuals over age 70 ½ and the distribution must be made to a public charity rather than a private foundation or donor advised fund.

A person who must take a required IRA minimum distribution can instead direct the required minimum distribution to a charity to avoid ordinary income on the required IRA minimum distribution.

Inherited Basis Reporting Requirements

In general, any asset inherited at the death of a decedent requires the beneficiary to take a tax basis in the asset equal to the decedent’s date of death value. The IRS has instituted new basis reporting requirements to ensure that the beneficiary is not using an inflated basis on the subsequent gift or sale of the inherited asset.

The new reporting requirements are imposed upon an Executor or Administrator of every estate that is required to file a Federal estate tax return (“Form 706”). The reporting requirements must be outlined on IRS Form 8971, Information Regarding Beneficiaries Acquiring Property From a Decedent. Form 8971 is currently in draft form. The IRS has also recently issued guidance indicating that an estate that files a Form 706 merely to elect portability is not required to file Form 8971.

Leech Tishman’s Estates & Trusts Practice Group is able to assist with questions you may have regarding estate law.

David J. DelFiandra is a Partner in the Estates & Trusts Practice Group in Leech Tishman’s Pittsburgh office. He can be reached at 412.261.1600 or

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