Estate Tax: Effect of the Tax Cut and Jobs Act on German Domiciliaries

Estate Tax: Effect of the Tax Cut and Jobs Act on German Domiciliaries

On December 22, 2017, Public Law 115‑97 ("Tax Cuts and Jobs Act") was enacted. Sec. 11061 of the Act more than doubles the estate and gift tax exemption amount for decedents dying or gifts made after December 31, 2017, and before January 1, 2026, by increasing the basic exclusion amount under IRC §. 2010(c)(3) from $5 million to $10 million. (Under current law, the amount is indexed for inflation occurring after 2011.). Adjusting the base amount for inflation results in a 2018 exclusion of $11.2 million for individuals and $22.4 million for married couples. IRC §§ 2101-2108 which pertains to the "Estates of Non-Residents Not Citizens," was not amended. Accordingly, the estate and gift tax exemption amount for decedents dying or gifts made after December 31, 2017, and before January 1, 2026 remains to be the relatively meager amount of $60,000. However, if the non resident alien decedent was domiciled in Germany, the estate can claim a prorated unified credit based on the ratio of U.S. situs assets to worldwide assets.    

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