IRS Announces Increase to Federal Transfer Tax Exemption; Gift Tax Annual Exclusion Stays the Same

Federal Transfer Tax ExemptionThe IRS recently published Rev. Proc. 2013-35, which announces the annual inflation adjustments for certain federal tax provisions for 2014. Among many other adjustments, the federal estate, gift and generation-skipping federal transfer tax exemption was increased from $5.25 million to $5.34 million. Accordingly, the estate of a person dying in 2014 will only incur federal estate tax if the value of the person’s assets exceeds $5.34 million, adjusted for prior taxable gifts. The gift tax annual exclusion did not change, and remains at $14,000. Any individual may gift $14,000 to any other individual without paying federal gift tax or filing a federal gift tax return.

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