Buried in the Tax Relief Act of 2010 was a provision that increased the lifetime gift tax exemption from $1 million to $5 million for each individual ($10 million for a married couple). This increase in exemption was provided for a period of two years and is slated to sunset on December 31, 2012.
Congress is now in the midst of a gargantuan task of reducing the federal deficit by $1.3 trillion dollars over the next ten years. A congressional “super-committee” has been given the task of devising a roadmap for deficit reduction and must do so prior to the Thanksgiving congressional break. As you may imagine, there are many rumors regarding changes to existing tax law to be used as revenue raisers. One of the rumors in the tax chatter community is the potential roll back of the gift tax exemption to its 2010 levels. While still just a rumor, it may pay to be proactive. If you were planning on making a gift prior to December 31, 2012, it may be wise to accelerate it.