2013 Inflation-Adjusted Figures

Author:
Nikki Marie Oliveira, Esq., LL.M., Margolis & Bloom, LLP

Rev. Proc. 2012-41 was recently released with the inflation-adjusted items for 2013. 

Gift Tax.  The figure that is arguably most important to those of us in the T&E field is the annual gift exclusion amount under § 2503.  This amount has been increased from $13,000 to $14,000.  Practitioners will now be advising clients that gift-splitting is permitted at a rate of $28,000.  We’ll get used to it.  For gifts to a noncitizen spouse under §§ 2503 and 2523(i)(2), the exclusion has risen from $139,000 to $143,000.  Recipients of gifts from certain foreign persons are required to report gifts under § 6039F if the aggregate value of gifts received in a taxable year exceeds $15,102 (the threshold in 2012 was $14,723).

Estate Tax.  For estates of decedents dying in 2013, if the personal representative elects to use the special use valuation method under § 2032A for qualified real property, the aggregate decrease in the value of qualified real property resulting from the election for purposes of the estate tax cannot exceed $1,070,000 (formerly $1,040,000).  The dollar amount used to determine the "2-percent portion" for calculating interest under § 6601(j) of the estate tax extended as provided in § 6166 is $1,430,000 (up from $1,390,000).

Foreign Earned Income Exclusion.  Under § 911(b)(2)(D)(i), this figure is now $97,600 (previously $95,100).

Please note that Rev. Proc. 2012-41 did not address a number of items, including the following: the tax rate tables under § 1; the adoption credit under § 23; the child tax credit under § 24; the Hope Scholarship and Lifetime Learning Credits under §25A; the earned income credit under § 32; the standard deduction under § 63; the overall limitation on itemized deductions under § 68; the qualified transportation fringe benefit under § 132(f); the adoption assistance exclusion under § 137; the personal exemption under §151; the election to expense certain depreciable assets under § 179; the interest on education loans under § 221; and the unified credit against estate tax for estate of decedents under § 2010(c).  We will keep an eye out for future guidance regarding these items and will update you accordingly.

 

Type of Tax	Code Section	2012	2013
The “Kiddie Tax”	1(g)	$950	$1,000
Rehabilitation Expenditures Treated as Separate New Building	42(e)(3)(A)(ii)(II)	$6,200	$6,400
Alternative Minimum Tax Exemption for a Child Subject to the "Kiddie Tax”	59(j)	The exemption may not exceed the sum of (1) the child’s earned income for the taxable year, plus (2) $6,950.	The exemption may not exceed the sum of (1) the child’s earned income for the taxable year, plus (2) $7,150.
Private Activity Bonds Volume Cap	146(d)(1)	The amounts used to calculate the State ceiling for the volume cap for private activity bonds is the greater of (1) $95 multiplied by the State population, or (2) $284,560,000.	The amounts used to calculate the State ceiling for the volume cap for private activity bonds is the greater of (1) $95 multiplied by the State population, or (2) $291,875,000.
Eligible Long-Term Care Premiums	213(d)(10)	40 or less … $350 41- 50 … $660 51 – 60 … $1,310 61 - 70 … $3,500 More than 70 … $4,370	40 or less … $360 41- 50 … $680 51 – 60 … $1,360 61 - 70 … $3,640 More than 70 … $4,550
Expatriation to Avoid Tax	877	An individual with “average annual net income tax” of more than $151,000 for the five taxable years ending before the date of the loss of United States citizenship is a covered expatriate.	An individual with “average annual net income tax” of more than $155,000 for the five taxable years ending before the date of the loss of United States citizenship is a covered expatriate.
Tax Responsibilities of Expatriation	877A	The amount that would be includible in the gross income of a covered expatriate is reduced (but not below zero) by $651,000.	The amount that would be includible in the gross income of a covered expatriate is reduced (but not below zero) by $668,000.
Attorney Fee Awards	7430(c)(1)(B)(iii)	$180 per hour.	$190 per hour.
Periodic Payments Received under Qualified Long-Term Care Insurance Contracts or under Certain Life Insurance Contracts	7702B(d)(4)	The stated dollar amount of the per diem limitation regarding periodic payments treated as paid by reason of the death of a chronically ill individual is $310.	The stated dollar amount of the per diem limitation regarding periodic payments treated as paid by reason of the death of a chronically ill individual is $320.