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San Jose, CA gift tax attorney marital deductionMany people have strong feelings about the inheritance they plan to leave to loved ones when they pass away. After working hard to acquire assets throughout your life, you do not want the value of these assets to be reduced through estate tax or gift tax. If this is something you are concerned about, you may be interested to learn about an estate preservation tool called the unlimited marital deduction.

The Unlimited Marital Deduction Allows Married Couples to Be Treated as One Economic Entity

The unlimited marital deduction lets an individual leave money or property to his or her spouse without incurring immediate federal taxes or penalties. The value of the property that you can transfer is unlimited, and this transfer can take place during your lifetime or upon your death. In 1982, the unlimited marital deduction took effect, eliminating the federal gift and estate tax for property transfers involving spouses. This provision changed the law so that married spouses are now treated as one financial unit when it comes to property transfers.

The Marital Deduction Delays Estate Tax Liability

Spouses have the opportunity to transfer all of their property to a surviving spouse if they choose to do so, and they can do this without incurring federal gift tax or estate tax liability. However, this property is still included in the surviving spouse’s taxable estate, and it is therefore subject to taxation when the second spouse passes away. The unlimited marital deduction effectively delays the estate tax liability until the second spouse in a marriage passes away. It should be noted that in order to take advantage of the unlimited marital deduction, the spouse receiving the property transfer must be a U.S. citizen. However, other estate planning instruments such as a qualified domestic trust may help those who are not yet U.S. citizens gain the marital deduction and reduce their estate taxes.

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San Jose tax attorney, tax issues, avoiding tax liability, purchasing a business, tax clearancePurchasing a business can be an exciting venture, allowing a person or company to expand his or her assets and add additional sources of income. However, business owners should be aware of the tax issues that can arise when buying a business, including whether they will be responsible for the business’s tax liability.

Successor Liability

If a business owes taxes, interest, or penalties at the time of its sale, the purchaser of the business may be held liable for these amounts. This is known as successor liability, and the California State Board of Equalization (BOE) may enforce this liability through a state sales tax audit within three years of the purchase of the business. A state sales tax refund claim may also trigger the enforcement of a tax liability.

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