2006 Inflation Adjustments

The following anticipated 2006 cost-of-living adjustments are expected:

a. For gifts made in 2006, the gift tax annual exclusion will increase to $12,000 (up from $11,000 for gifts made in 2005).

b. For estates of decedents dying in 2006, the limit on the decrease in value that can result from the use of special valuation will increase to $900,000, up from $870,000 in 2005.

c. For gifts made in 2006, the annual exclusion for gifts to noncitizen spouses will be $120,000 (up from $117,000 in 2005).