iOn November 15, 2018, the IRS released the 2019 inflation adjustments for several tax provisions in Rev. Proc. 2019-57. The adjustments apply to tax years beginning in 2019 and transactions or events occurring during the 2019 calendar year. With respect to estates and trusts, below are select key provisions and amounts for the 2019 calendar year.
Income Tax of Trusts and Estates
The taxable income thresholds on trusts and estates under §1(e) are:
| If Taxable Income is: | The Tax is: |
| Not over $2,600 | 10% of the taxable income |
| Over $2,600 but not over $9,300 | $260 plus 24% of excess over $2,600 |
| Over $9,300 but not over $12,750 | $1,868 plus 35% of excess over $9,300 |
| Over $12,750 | $3,075.50 plus 37% of excess over $12,750 |
The alternative minimum tax exemption amount for estates and trusts under §55(d)(1)(D) is:
| Filing Status | Exemption Amount |
| Estates and Trusts ((§55(d)(1)(D)) | $25,000 |
The phaseout amounts of alternative minimum tax for estates and trusts under (§55(d)(3)(C)) are:
| Filing Status | Threshold Phaseout | Completed Phaseout |
| Estates and Trusts ((§55(d)(3)(C)) | $83,500 | $183,500 |
Estate and Gift Tax
For an estate of a decedent dying in 2019, the basic exclusion amount, for purposes of determining the §2010 credit against estate tax, is $11,400,000.
For an estate of a decedent dying in 2019 that elect to use the §2032A special valuation method for qualified property, the aggregate decrease in value must not exceed $1,160,000.
The §2503(b) annual gift tax exclusion for gifts made in 2019 is $15,000 per donee.
For gifts made to a non-citizen spouse in 2019, the annual gift tax exclusion under §2523(i)(2) is $155,000.
Additionally, recipients of gifts from certain foreign persons may be required to report these gifts under §6039F if the aggregate value of the gift(s) received in 2019 exceeds $16,388.
For an estate of a decedent dying in 2019 that elect to extend the payment of estate tax under §6166, the 2% portion for determining the interest rate under §6601(j) is $1,550,000.
2019 Penalty Amounts
In the case of failure to file a return, the addition to tax under §6651(a)(1) is not less than the lesser of $215 or 100% of the amount required to be shown on the return.
The penalties under §6652(c) for certain exempt organizations and trusts failing to file returns, disclosures, etc., which are required to be filed in calendar year 2019, are:
| Returns Under §6033(a)(1) (Exempt Organizations) or §6012(a)(6) (Political Organizations) | ||
| Scenario | Daily Penalty | Maximum Penalty |
| Penalty on Organization (§6652(c)(1)(A)) | $20 | Lesser of (i) $10,500 or (ii) 5% of gross receipts for year |
| Penalty on Organization with Gross Receipts Greater than $1,049,000(§6652(c)(1)(A)) | $105 | $53,000 |
| Penalty on Managers (§6652(c)(1)(B)(ii)) | $10 | $5,000 |
| Public Inspection of Annual Returns and Reports (§6652(c)(1)(C)) | $20 | $10,500 |
| Public Inspection of Applications for Exemption and Notice of Status (§6652(c)(1)(D)) | $20 | No limits |
| Returns Under §6034 (Certain Trust) or §6043(b) (Terminations, etc., of exempt organizations) | ||
| Scenario | Daily Penalty | Maximum Penalty |
| Penalty on Organization or Trust (§6652(c)(1)(A)) | $10 | $5,000 |
| Penalty on Managers (§6652(c)(2)(B)) | $10 | $5,000 |
| Penalty on Split Interest Trust (§6652(c)(2)(C)) | $20 | $10,500 |
| Split Interest Trust with Gross Income Greater than $262,000 (§6652(c)(2)(C)(ii)) | $105 | $53,000 |
| Disclosure Under §6033(a)(2) | ||
| Scenario | Daily Penalty | Maximum Penalty |
| Penalty on Tax-Exempt Entity (§6652(c)(3)(A)) | $105 | $53,000 |
| Failure to Comply with Demand (6652(c)(3)(B)(ii)) | $105 | $10,500 |
