Important Tax Alert

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From friend of the firm, Marvin Blum, The Blum Firm, PC:


Although we have been hoping that there would be no major tax law changes until December 31, 2012, we are now concerned that significant changes could take effect before the end of 2011.

Last month, Congress voted to increase the nation’s debt ceiling to avoid a potential default.  This legislation is known as the Budget Control Act of 2011, which President Obama signed into law on August 2, 2011.

The Budget Control Act of 2011 calls for a new Joint Committee to consider year-end tax legislation. Congress has indicated that by November 2011, and not December 31, 2012, as originally anticipated, major changes to the tax code may be proposed.  It is possibe that the effective date for any new legislation will be the date of proposal and not enactment.  The changes could eliminate tax savings techniques that currently are available to reduce gift, estate and income taxes. The changes could eliminate: (i) valuation discounts for partnerships and other closely held businesses (although the recommended proposal keeps valuation discounts for active businesses); (ii) short-term Grantor Retained Annuity Trusts (“GRATs”); (iii) sales of discounted assets to intentionally defective grantor trusts (“estate freeze” transactions); (iv) long-term dynasty trusts; and (v) numerous other currently effective tax planning techniques that have been previously targeted for restriction or elimination.

If you have been considering any of these planning techniques, we recommend that you proceed now before Congress acts. If you wait, the opportunity may pass without additional warning.


Marvin Blum

The Blum Firm, P.C.


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