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Gift Tax Certainty at Last? re: H.R. 1104

The U.S. House of Representatives this week passed a bill to provide gift tax certainty to individuals who make gifts to 501(c)(4) social welfare organizations, 501(c)(5) labor unions, and 501(c)(6) trade associations.  The bill, H.R. 1104 (the “Fair Treatment for All Gifts Act”), was approved with bipartisan support on a voice vote.  It now goes to the Senate for consideration.

H.R. 1104, if enacted by the U.S. Senate and not vetoed by the President, would amend the Internal Revenue Code to provide that gifts to social welfare organizations, labor unions, and trade associations would not be subject to the federal gift tax.  The bill effectively adopts, as law, the IRS’s long-standing practice (and formal position since 2011) that transfers to social welfare organizations are not subject to the federal gift tax.  The bill extends the same treatment to gifts to labor unions and trade associations.

In a related move, the House also passed a bill to repeal the federal estate tax (H.R. 1105, the “Death Tax Repeal Act”).  If enacted into law, the ability to make gift- and estate-tax free bequests to social welfare organizations, labor unions, and trade associations could open up new planning possibilities for donors.

 

© 2020 Covington & Burling LLPNational Law Review, Volume V, Number 107
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Covington’s tax group advises multinational clients on their most significant and challenging tax issues. Our members have extensive government experience, including senior positions at the U.S. Department of Treasury, Internal Revenue Service, and the U.S. Senate. Combined with our talents, focus and creativity, we provide bespoke solutions for sustained tax minimization in an increasingly regulated world. And, in disputes with the tax authorities, we secure favorable results by efficiently resolving matters as early in the administrative process as possible, and, where...

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