New IRS Rule Might Make More Farmers Eligible for “Death Tax”

Death tax

U.S. Representative Randy Hultgren, R-Plano, explained that the new IRS rule calculates interest in the value of family farms that would be left to the next generation of farmers. This, in turn, results in 40% more in federal estate tax. Hultgren’s legislation would defund the enforcement of the new IRS rule. “The IRS would not be able to use any appropriated funds to enforce this rule,” Hultgren said.

Hultgren said the new tax regulation will, in effect, assist the big corporate farms that have the resources to purchase the land that small farmers would need to sell just to pay the tax. Those with the cash can come in and buy at fire sale prices: the large corporate-owned farms, he said.

The state of Illinois has an inheritance tax of 16% that begins at $4 million in total assets.

The federal government has enacted measures to help farmers who would be hit with a large estate tax. However, this is really just a loan to pay off the tax over time with interest. In the past, a small number of family farms have been subject to the federal estate tax due to exemptions and loopholes. The Tax Policy Center reports that only 120 farms paid the estate tax in 2013. The new tax regulation, Hultgren said, might see that number skyrocket. He thought the cost of estate planning could be reinvested into the farm.

The Illinois Society of Professional Farm Managers and Rural Appraisers says that an acre of high-quality farmland in the Land of Lincoln is worth on average $11,737 per acre. About 460 acres of farmland at that price would trigger the federal estate tax, not counting valuation of machinery, structures, or livestock on the farms.

Reference: Illinois News Network (October 19, 2016) “Congressmen plan to defund new IRS rule making more farms eligible for ‘death tax’”


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