“Current law provides for an estate tax exemption of $5 million indexed for inflation, allows portability between spouses and includes stepped-up basis.”
Proposed estate tax repeal legislation has been introduced in Congress that would assist farm and ranch families with the challenges of passing their family businesses to the next generation.
An article in Farm Bureau, “Estate Tax Repeal Bills Would Help Family Farmers,” says that rather than spending money on life insurance and estate planning, many farmers today will expand their businesses by upgrading buildings, purchasing needed equipment and adding livestock.
More significantly, when a family member dies, the family can keep farming or ranching without having to sell land, livestock or equipment in order to pay the tax. While the current laws help people involved in agriculture, the estate taxes are still a big issue.
Family-owned farm and ranch assets typically are tied to illiquid assets like farm and ranch land, buildings and equipment. When estate taxes on an agricultural business are greater than cash and other liquid assets, surviving family partners have few options but to sell off their assets, which jeopardizes the viability of their business.
The bipartisan Death Tax Repeal Act of 2017 (H.R. 631 and S. 205) was introduced in the House by Representatives Kristi Noem (R-S.D.) and Sanford Bishop (D-Ga.) and in the by Senate John Thune (R-S.D.).
The bill is designed to help protect the family farms, which are vital to feeding our great country and who in many cases, barely generate enough profits to sustain their operations.
Reference: Farm Bureau (January 26, 2017) “Estate Tax Repeal Bills Would Help Family Farmers”