State taxes
As the personal exemption rises, the exemption for the business decreases so that at no point may more than $1,300,000 be exempt from Federal Estate Tax. state taxes Irs deductions. For example, if a person died in 1998 the personal exemption would be $625,000 and qualified family owned business exemption would be $675,000 yielding a total exemption of $1,300,000. If the same individual dies in 2006, the business exemption would be $300,000 because the personal exemption would be $1,000,000, yielding a total exemption of $1,300,000. Therefore, as you can see, you will not receive the full benefit of the personal exemption unless you survive until the year 2006. state taxes Irs tax. EXCLUSION FOR GAIN FROM INCOME ON SALE OF RESIDENCEPossibly the change to the capital gains tax for the sale of principal residences will have the greatest immediate income tax impact. The new law eliminates the rollover deferral on the sale of a primary residence as well as the one-time $125,000 exclusion on gain for homeowner age 55 and older. Losses are still non-deductible. state taxes Income taxes. Instead, the new law provides for the exclusion from gain from income up to $250,000 per person ($500,000 for taxpayers filing jointly) on the sale of a principal residence. There is no minimum age requirement to take advantage of the new law. There are some requirements which the taxpayer needs to meet in order to benefit from this law: The exclusion can only be used once every two years and the house must have been used as a principal residence for atleast 2 of the 5 years before the sale. Neither spouse must be ineligible for the exclusion because of the once-every-two year limit. Both spouses must have used the house as a principal residence for at least two of the previous five years. CAPITAL GAINS CHANGESThe changes to the capital gains laws are somewhat more complex than the rules of selling a principal residence. It is no longer a question of whether the sale produces a short-term or long-term gain. Now there is a mid-term gain, as well asdifferent rates for assets purchased after the year 2000. A short-term gain is still a gain on the sale of a capital asset which was owned for less than a year. The tax on such a gain is at ordinary income tax rates. The mid-term gain is one in which a capital asset is held between one year and eighteen months and is sold for a gain.
State taxes
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