Comment by WalterBright
5 days ago
> There's no federal inheritance tax. Only some states have it. You're thinking of the estate tax.
They're the same as far as this discussion is concerned, as the amount that the beneficiary gets is (roughly) the same.
> "The loan" otherwise known as "income" because that's what it really was
Borrowed money is not "income" in any sense of the word. When I was on summer vacation, I decided to take a class in accounting. One of the most productive uses of my time. I recommend it. P.S. if your business tries to classify borrowed money as "income", that's called fraud.
> If you read the link I posted
I rely on my CPA for tax advice, not the internet, nor do I care much for misusing accounting terms. I've read too many articles that confuse income with revenue, wealth with income, and so on.
> They're the same as far as this discussion is concerned, as the amount that the beneficiary gets is (roughly) the same.
The estate's value is reduced by what it owes.
> if your business tries to classify borrowed money as "income"
sigh C'mon man, engage in good faith here. Stop saying things I didn't say.
If you can borrow cash against assets, don't have to pay principle until you die, and only pay low interest payments then it's functionally the same as selling those assets at a low tax rate. That's the principle.
And if you can use trusts to avoid estate taxes then there are no (or very low) taxes due ever.
> I rely on my CPA for tax advice
Ok ask your CPA what they know about using trusts to avoid estate taxes. Maybe it's BS but maybe it's true. Without some curiosity, how will you ever know?
> not the internet
More reputable sources than Reddit indicate it may be possible to use trusts to greatly reduce or eliminate estate tax:
https://privatebank.jpmorgan.com/nam/en/insights/wealth-plan...
https://www.investopedia.com/terms/g/grat.asp
https://www.fidelity.com/learning-center/personal-finance/wh...
I don't think anyone is arguing that a loan is income in a legal sense. I am going to generously assume you misunderstood.