Skip to Main Content
 

Beth Kaufman Comments on Bernie Sanders' Estate Tax Proposal

February 5, 2019, Bloomberg Law, Daily Tax Report

Senator Bernie Sanders’ recent proposal to rein in estate tax avoidance could create a scenario that is more like the Greek myth of the Hydra: cut off one head and two grow back in its place.

“It's hard to win at this game if you're Congress,” said Beth Shapiro Kaufman of Caplin & Drysdale in Washington. Once lawmakers draft new rules, “They can be used in some cases to the government's advantage and in other cases to the taxpayer's advantage. It's hard to write a rule that just says, ‘The taxpayer always loses’ because there aren't such rules.”

. . .

For a historical example, look to the intentionally defective grantor trusts that Sanders, an independent from Vermont, proposes curtailing in his bill. The strategy allows a person to transfer assets into a trust and continue to pay income tax on the value of those assets, but freezes the value for estate tax purposes so any gain—which can be substantial—escapes the 40 percent tax.

“That technique takes advantage of rules that were enacted decades ago to prevent other abuses,” Kaufman told Bloomberg Tax.

. . .

New Opportunities

. . .

More taxpayers may take advantage of the sweetened farmland and conservation easement tax perks than they have in the past if Sanders's bill is enacted. But the trend would likely be limited among ultra-high net worth individuals, because the benefits may not be significant enough to prompt a change in behavior, Kaufman said.

. . .

Loophole or Not?

. . .

“There are a number of things that I would hesitate to call loopholes,” Kaufman said.

. . .

But to extent the strategy is a loophole, it's “a congressionally created loophole,” Kaufman said.

For the full article, please visit Bloomberg’s website (subscription required).

Excerpt taken from the article “Bernie Sanders’ Plan May Spur Types of Tax Dodges It Aims To Stop” by Allyson Versprille for Bloomberg Law’s Daily Tax Report.

________________________________________________

About Caplin & Drysdale
Having celebrated our 50th Anniversary in 2014, Caplin & Drysdale continues to be a leading provider of legal services to corporations, individuals, and nonprofits throughout the United States and around the world. We are also privileged to serve as legal advisors to accounting firms, financial institutions, law firms, and other professional services organizations.

The firm's reputation over the years has earned us the trust and respect of clients, industry peers, and government agencies. Moreover, clients rely on our broad knowledge of the law and our keen insights into their business concerns and personal interests. Our lawyers' strong tactical and problem-solving skills -- combined with substantial experience handling a variety of complex, high stakes, matters in a boutique environment -- make us one the nation's most distinctive law firms.

With offices in New York City and Washington, D.C., Caplin & Drysdale's core practice areas include:
For more information, please visit us at www.caplindrysdale.com.
Washington, DC Office:
One Thomas Circle NW
Suite 1100
Washington, DC 20005
202.862.5000
New York, NY Office:
600 Lexington Avenue
21st Floor
New York, NY 10022
212.379.6000

___________________________

Disclaimer
This communication does not provide legal advice, nor does it create an attorney-client relationship with you or any other reader. If you require legal guidance in any specific situation, you should engage a qualified lawyer for that purpose. Prior results do not guarantee a similar outcome.

Attorney Advertising
It is possible that under the laws, rules, or regulations of certain jurisdictions, this may be construed as an advertisement or solicitation.
© 2019 Caplin & Drysdale, Chartered
All Rights Reserved.

Related Professionals

Related Practice Area(s)