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Step Transaction Doctrine: Planning For 2026 Exemption Reduction and Possible Law Change

Craft plans to avoid application of the step transaction doctrine before the exemption potentially gets reduced.

The lifetime gift and estate tax exemption is scheduled to decline by half in 2026 under current law.1 As all eyes begin to focus on the upcoming presidential and congressional elections, practitioners and their clients may have renewed concerns about new tax legislation to reduce the exemption—perhaps by even more than half. Practitioners may experience an uptick in planning projects as clients seek to finish their planning as quickly as possible.  

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