The change will layer an increased capital gains tax on top of any gift, estate or generation-skipping transfer tax due and will eliminate the step-up in basis in estates.
Small businesses and professional firms changing the way they manage their income with more funding of retirement accounts rather than investing in the equity of the company, and fewer owning their place of business, so driving up commercial rents.
Also, considering the deferral of gains recognition for family businesses, look for family members who are forced into “material participation” in the business, and a sharp decline in M & A transaction involving closely held businesses, in order to avoid triggering the capital gains tax.
This is because the tax changes made in 2017 under President Trump only last for 10 years, that is the laws revert back in 2026, only five years away.
As a fourth generation estate attorney and managing partner of Erskine & Erskine LLC, I provide creative estate and strategic tax planning for business owners, collectors, and their families.My true passion is customized planning for collections as well as legacy real estate and family businesses.