CPA: Be Wary of the Transfer Tax
Part of President Biden’s American Families Plan includes a proposal for a new transfer tax that farm and ranch families should be wary of. That’s according to Paul Neiffer, with the Clifton Larson and Allen CPA firm in Washington state. He says the million-dollar exemption on appreciated assets sounds good, but…
“In the farm arena, your typical farmer that is making a living from farming would easily exceed that million-dollar threshold.”
Neiffer says it’s pretty simple, really.
“So, the transfer tax, what happens is on their form 10-40, right on their personal tax return, they’re going to add up all that appreciation and whatever exceeds the exemption amount is just going to become capital gain income on that tax return. And, if Biden’s proposal goes through, that tax rate would be a maximum rate of 43.4%, plus whatever state income tax might be applicable.”
Bottom line, Neiffer says the transfer tax is substantially worse than the estate tax.
“The farm family worth $3 million would owe $5 million of transfer tax and owe no estate tax; as a matter of fact, they would be negative. They would go from being worth $3 million to being $2 million in the hole because of this transfer tax.”
Neiffer says it’s important that every agricultural stakeholder get on the phone with their elected officials and let them know the transfer tax is wrong.