Federal tax brackets for 2002
They may revert to a smaller or even minimum distribution amount without concern for the 15% excise tax at death. federal tax brackets for 2002 Federal tax form. Husbands and wives who have named each other as beneficiaries of their qualified plans or IRAs solely to obtain deferral of the 15% excise tax on the first death may want to rethink the implications (tax and otherwise) of their beneficiary designations. CHARITABLE REMAINDER TRUSTS RESTRICTEDTwo new requirements have been added to the Internal Revenue Code to stop perceived abuses of charitable remainder trusts. First, the annual payout percentage may no longer exceed 50%. federal tax brackets for 2002 Louisiana state tax forms. (In the view of the IRS, certain high-payout charitable trusts have been established in the past where the grantor had no charitable intent and was solely motivated by the trust''s special tax treatment allowing for the avoidance or deferral of taxes on capital gains. ) Second, the charity''s remainder interest in the trust must now be at least 10% of the initial fair market value of the assets transferred to the trust. As to any subsequent contributions to the trust, the value of the remainder interest in the contributed property must be equal to at least 10% of the fair market value of the property when contributed. federal tax brackets for 2002 Louisiana state tax forms. CommentThese restrictions became effective this past summer for trusts created during the donor''s lifetime. If you established a charitable remainder trust recently, you may want your attorney to rerun the calculations to make sure your trust qualifies under the new law. If it does not, the Act allows you to amend the trust or have it declared null and void and unwound. As to charitable remainder trusts to be established upon the death of the donor (testamentary charitable remainder trusts), there are short-term and narrow transition rules. We recommend that all GCWF clients with testamentary charitable remainder trusts contact their attorneys at their earliest convenience (see box below) so that changes, if any, may be made to these trusts to ensure compliance with the new restrictions. In all respects, the Act significantly limits planning opportunities with charitable remainder trusts for the benefit of donors in their 30''s and 40''s as well as charitable remainder trusts with younger children or grandchildren as successive beneficiaries. FAVORED DEDUCTION FOR PUBLICLY-HELD STOCKGIVEN TO A PRIVATE FOUNDATION EXTENDEDA donor can deduct only the basis in appreciated property contributed to a private foundation. Since 1969, however, with only a brief exception, a full fair market value deduction has been allowed for most contributions to a private foundation of appreciated publicly-held stock that had been held sufficiently long to acquire the status of a long-term capital asset. This rule expired on June 1, 1997, but the Act reinstated this fair market value deduction with respect to contributions made through June 30, 1998. CommentThis restoration of the fair market value deduction may also affect contributions to charitable remainder trusts. The basis limitation on the deduction for contributions of appreciated assets applies to gifts to charitable remainder trusts if a private foundation is the remainder beneficiary or if the grantor can change the remainder beneficiary to such a foundation. NEW CAPITAL GAINS RATES AND CAPITAL GAINS EXCLUSION FOR SALE OF A RESIDENCE HAVE ESTATE PLANNING IMPLICATIONSThe Act contains new capital gains rates and a capital gains exclusion on the sale of a residence, both of which have estate planning consequences. To summarize, the new capital gains rates are as follows: 20% rate for property held over 18 months (10% maximum rate for taxpayers in the 15% bracket) 18% rate for property held for five years if acquired after year 2000 (holding period must be five years from then, so first eligibility is after 2005) - special mark-to-market rules for property acquired before 2000 (elective) 28% rate for property held one year to 18 months, and for collectibles 25% rate on real estate depreciation recapture Ordinary income rate for property held less than one year. The above rates are effective for sales after July 28, 1997 (with a special rule for sales after May 6, 1997 but before July 29, 1997). The new $250,000 ($500,000 if married and filing jointly) capital gains exclusion on a sale of a residence applies to all taxpayers if certain use and ownership requirements are met. This new law replaces two provisions in prior law concerning the taxpayer''s residence, the tax-free rollover rule and the one-time $125,000 exclusion from gain for taxpayers 55 years of age and above. CommentThe new capital gains rates may reduce the use of charitable remainder trusts to avoid capital gains.
Federal tax brackets for 2002
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