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Tax Updates and Planning Ideas for 2022



As we launch into the second quarter of the year, there are many new and proposed laws which impact or may impact businesses and wealthy individuals. Lobb & Plewe will do our best to keep you updated as we move forward.

Proposed Federal Tax Law Changes:

On March 28, 2022, President Biden released his fiscal year 2023 budget (the “2023 Budget”) which consists of approximately $5.7 trillion in spending. The U.S. Treasury has released the “Green Book,” which provides details related to revenue provisions in the 2023 Budget. The revenue proposals in the 2023 Budget rely on a baseline that presumes enactment of the revenue provisions in the Build Back Better Act (the “BBBA”) as passed by the House of Representatives on November 19, 2021.

The revenue proposals described in the Green Book are intended to be in addition to the provisions in the BBBA. This is a curious story line because the BBBA stalled in the Senate at the end of 2021 and never became law.

It is up to Congress to pass a budget so the revenue proposals in the 2023 Budget may be included in future legislation. The way the proposed budget is being presented by the Administration appears to be a plea for Congress to enact pieces of the BBBA in order to declare a win in the context of the failed proposed legislation in 2021.

To raise revenue to pay for the spending contained in the FY2023 Budget, high-net-worth individuals and businesses are the piggy bank. The focus of the revenue raising proposals, encompass raising individual tax rates, raising capital gain and qualified dividend rates, taxing exchanges between grantors and grantor trusts, imposing restrictions on grantor retained annuity trusts and taxing dispositions of appreciated property at death. A summary of the proposed changes of interest to high-net-worth individuals include the following:

  • An increase in the C corporation tax rate from 21% to 28%.
  • An increase to the top marginal individual income tax rate from 37% to 39.6%. For taxable year 2023, the rate would apply to taxable income over $450,000 for married individuals filing jointly ($225,000 for married individuals filing separately), $425,000 for head of household filers and $400,000 for single filers. This proposal will be effective for taxable years beginning after December 31, 2022.
  • A limitation on gain deferred under IRC section 1031 to $500,000 for a single filer and $1MM for married individuals filing a joint return per taxpayer per year.
  • The imposition of ordinary income tax rates on long-term capital gains and qualified dividends for taxpayers with taxable income exceeding $1MM. If the proposal for raising the ordinary income tax rate to 39.6 % becomes law, then the maximum tax rate on capital gains would effectively be 43.4% (39.6% plus net investment income tax rate of 3.8%).
  • The application of ordinary income tax rates and self-employment tax for partners with taxable income from all sources exceeding $400,000. This subjects a partner’s allocable share of income from profits interests in investment partnerships such as carried interest to tax as ordinary income and self-employment tax regardless of the character of the income at the partnership level.
  • A wealth tax which consists of a minimum tax of 20% on taxable income, inclusive of unrealized capital gains, for taxpayers with a net worth in excess of $100 million. Payments of the minimum tax will be treated as a prepayment available to be credited against taxes on future realized capital gains. The minimum tax liability in subsequent years will equal 20% of (1) the taxpayer’s taxable income and unrealized gains reduced by (2) the taxpayer’s unrefunded, uncredited prepayments and regular tax. The tax due for the first year can be paid in nine equal annual installments. For subsequent years, the minimum tax could be paid in five equal annual installments.
  • The proposal does not eliminate the $500,000 exclusion currently available to joint filers nor the $250,000 for unmarried filers, upon the sale of their principal residence. It also does not eliminate the current exclusion on the sale of qualified small business stock under IRC 1202.

Estate Planning Changes:

Once again, the Administration seeks to limit estate tax planning. The proposal includes the following in the context of estate planning:

Transfers of appreciated assets by gift or death will be treated as realization events subject to capital gains tax, subject to a $5MM per donor lifetime exclusion. The proposal to tax unrealized capital gains on transferred appreciated property upon the occurrence of certain realization events, include:

  • Transfers of appreciated property by gift.
  • Transfers of appreciated property on death.
  • Transfers of property to, or distributions of property from, trusts, other than wholly revocable trusts.
  • Distributions of property from a revocable grantor trust to any person other than the deemed owner or U.S. spouse of the deemed owner, other than distributions made in discharge of an obligation of the deemed owner.
  • Terminations of a grantor’s ability to revoke a trust at death or during life.
  • Transfers of property to, and distributions of property from, partnerships or other non-corporate entities if the transfer is a gift to the transferee.
  • Recognition of gain on the unrealized appreciation of property held by trusts, partnerships or other non-corporate entities.

The proposal allows for some exclusions which include the following:

  • Transfers by a donor or decedent to a U.S. spouse will not be a taxable event, and the surviving spouse will receive the decedent’s carryover basis. The surviving spouse will recognize the gain upon disposition or death.
  • Transfers to charity will not generate a taxable capital gain. Transfers to a split interest trust, such as a charitable remainder trust, will generate a gain with an exclusion allowed for the charity’s share of the gain. Transfers of tangible personal property, such as household furnishings and personal effects are excluded. This exclusion does not include collectibles.
  • Once a donor has exhausted the lifetime gift exemption, the proposal allows a $5MM per donor exclusion from the recognition of additional unrealized capital gain on property transferred by gift or held at death. Any unused exemption by a deceased spouse would be portable to the surviving spouse, effectively making the exclusion $10 million per couple. This additional exclusion amount would be indexed for inflation after 2022. The transferee’s basis in the property shielded by this exemption will be the fair market value of the property at the time of the gift or the decedent’s death.

If passed into law, the proposal will be effective for transfers by gift, and on property owned at death by decedents dying after December 31, 2022, and on property owned by trusts, partnerships and other non-corporate entities on January 1, 2023.

The proposal allows payment of the tax on the appreciation of certain family owned and operated businesses to be deferred until the business is sold or ceases to be family owned and operated. The capital gains tax on appreciated property transferred at death is eligible for a 15-year fixed rate payment plan. Family businesses electing the deferral will not be eligible for the payment plan. Furthermore, contributions of appreciated property to charitable remainder trusts, will no longer have the favorable tax treatment afforded under current law.

Planning in 2022:

We are back to the same looming uncertainty experienced in 2021 as to how to plan for taxable events and estate tax. Because of Democrats not coming together to support the full BBBA, the manner in which the BBBA has been delivered to Congress by the Administration, it is clear the Administration is looking for pieces of the BBBA to be consumed in the final budget. Some of the “pieces” such as the wealth tax have been altered, but the underlying theme of raising taxes on companies and individuals to cover the massive budget remain. Which pieces will survive? Guessing could be costly so my mantra of “plan for the worst and hope for the best” will be repeated this year.

As to the changes in tax rates, planning early is best. If the changes in capital gains are to occur, the changes may be made with a retroactive effective date. This was the push by Democrats in 2021. Contrary to the opinion of some legal pundits, Congress can enact retroactive tax legislation. The Supreme Court unanimously upheld a retroactive increase in the estate tax rate in the 1994 case of United States v. Carlton. There are a few hurdles, but it can be done.

As to estate tax planning, many people began the creation and funding of grantor trusts in 2021 but did not complete the effort when it became clear the BBBA was not going to get through the Senate. If you have begun the process of creating and funding a grantor trust, it is a good idea to pick up where you left off.

If you have not begun the process, now is the time. Like 2021, professional advisors assisting clients with estate planning will become overloaded with work and may stop taking in new matters earlier in the year than normal.

In the context of estate planning, the revenue generating provisions of the 2023 Budget materially alters the rules for recognition of income when it comes to capital assets. Under current law, there generally must be a sale or exchange of property to generate a capital gain. The proposal will “deem” a sale when there was no sale. You must consider an estate’s likely liquidity. To pay the tax, the taxpayer will need cash to pay the capital gains tax. If the estate will not have sufficient cash, life insurance options must be considered.

Sales between a grantor and the grantor’s intentionally defective trust are not currently taxable events. The proposal will recognize such sales and require the seller to recognize gain on the sale of appreciated assets. It is imperative to understand the size of a taxable estate under the current rules as opposed to the rules which will exist if the 2023 Budget is passed in order to evaluate the planning which needs to be accomplished. An updated financial plan will be a great place to start.

The proposal will overturn IRS Revenue Ruling 85-13, which disregarded transactions between a grantor and the grantor’s trust for income tax purposes. This proposal will not be retroactive to transactions which occur before passage of the 2023 Budget. Under no circumstances should planning of this nature be delayed to the end of the year. Hastily structuring installment sales into grantor trusts is not prudent.

This article briefly touches on some of the provisions of the 2023 Budget and the fallout for companies and wealthy individuals, but it should spur some concern to plan now and not wait for the end of the year to see how things are going to settle. We are already in the second quarter of the year and it is not advisable to wait to the fourth quarter to start planning so we are left with five months to start and finish a comprehensive strategy to deal with the 2023 Budget. Provisions will obviously change but there will be a budget and the attack on companies and wealthy individuals will be a source of revenue funding.

The Inland Empire Business Journal (IEBJ) is the official business news publication of Southern California’s Inland Empire region - covering San Bernardino & Riverside Counties.

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Local Veteran and His Family Open New Graze Craze Charcuterie Business in Murrieta, California



Southern California wine country gets another stylish culinary option, offering beautifully designed, hand-crafted grazing boards and picnic boxes

Graze Craze® has opened a new location close to the wine country of Southern California, where its artfully arranged sweet and savory grazing boards and boxes create a perfect pairing for food lovers. Located at 24530 Village Walk Place, Suite C, in Village Walk Plaza, the 1,021-square-foot store is owned and operated by disabled veteran Chris Stout and his wife, Stephanie Stout, with assistance from their teenage children.

At Graze Craze, highly trained experts known as Grazologists™ skillfully design charcuterie arrangements that feature an assortment of fine ingredients perfect for grazing, like fresh fruits and vegetables, premium meats and cheeses, artisanal sweets, nuts, house-made jams and more.

Chris Stout enlisted in the U.S. Navy in 2001 and served several deployments before being discharged in 2012. Since then, he has worked as a field service engineer for an electronics company and in manufacturing sales. Stephanie Stout has a bachelor’s degree in business accounting from the University of Phoenix and worked for an insurance broker before the couple’s first child was born; she then devoted herself full-time to raising their three children, who are now in high school.

Graze Craze charcuterie boards offer something for every lifestyle, dietary preference or palate and are available in a variety of size options to cater to any occasion, big or small. They incorporate a medley of flavors, like the fan-favorite Gone Grazey board, a perfectly balanced mix of cured meats, premium cheeses, crackers, fresh produce, nuts and more. The Vegegrazian is impeccably designed with a plethora of fresh fruits and vegetables for anyone embracing a plant-based lifestyle. Those with an undeniable sweet tooth can enjoy the Sweet & Grazey, a hand-crafted board featuring an abundance of delectable desserts like chocolates and baked goods paired with sweet dips to accent the irresistible flavors.

New to the Graze Craze menu is the Brunch Board, a gourmet and innovative twist on any morning routine. Packed with breakfast meats, fresh fruits, eggs, pastries and more, this board is the perfect bagel-and-donut brunch alternative. Grazers can also tackle watch-party cravings with a seasonal Game Day Board, featuring a feast of

crowd-pleasing ingredients, like peppered salami, Italian prosciutto, goat cheese, cranberry walnut bread, raspberry jam and chocolate bark, to name a few.

The artisan-inspired charcuterie offerings at Graze Craze are available in different size options, from Char-Cutie-Cups and Picnic Boxes for nibbling to sharing-size boards with enough fresh food to feed a large party. The food displays are ideal for elevating work meetings, family gatherings, lavish events and more, while they also make for memorable gifts that impress.

Besides sharing the flavorful menu with the area, the Stouts are actively involved in numerous local school, business and community organizations. The pair supports the Murrieta Valley High School Marching Band Boosters and California High School Rodeo Association District 8, in addition to the Boy Scouts of America California Inland Empire Council and Friends of Temecula Troop 309, where Christopher Stout is a part of the adult leadership team. The couple has also worked with Homes For Our Troops, an impactful nonprofit organization that builds specially adapted homes for post-9/11 disabled veterans.

Graze Craze Murrieta is open for pick-up, catering and free local delivery Monday through Saturday from 9 a.m. to 6 p.m. and Sunday from 10 a.m. to 2 p.m. For more information, call 951-942-7293.

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Partners in Action: How CalOSBA is bridging the gap in funding and resources for Inland Empire small businesses



By Josaline Cuesta, California Program Director, Small Business Majority & IEBJ Content Contributor

For Tara Lynn Gray, Director of the California Office of the Small Business Advocate (CalOSBA), entrepreneurship has always been a core principle of her life. Her journey as an advocate for small businesses wasn’t built on textbooks, but on her family’s roots in small business ownership. As a young girl, she watched her grandmother empower and elevate Black women’s presences by styling their hair and instilling confidence in their personhood. She witnessed the direct impact of small businesses on community members in real time, and that’s always stayed with Tara.

As a key partner of Small Business Majority, she stands as a champion for the dreamers and risk-takers; the pillars of the communities across California and in the Inland Empire. I chatted with her to share more about her work at CalOSBA, what entrepreneurs can expect when they meet with a CalOSBA advisor, and the resources and community support available to help boost entrepreneurship in the Golden State.

Tell us about CalOSBA’s role in the small business community.

“California has the biggest small business community in the country, accounting for 4.1 million small businesses in 2023 alone. The overwhelming majority have no employees at all, except themselves, which means they don’t have a Board of Directors, expensive consultants, and they definitely don’t have lobbyists. I take my role as their advocate seriously, talking with and listening to small business owners from up and down the state. During the pandemic, we were under a very bright spotlight, administering nearly $5 billion in direct relief funding and we’re proud of the grant programs we still oversee. But that’s only a small part of what we do at CalOSBA.

My team connects small business owners to information and resources to help them get started, manage their business and, most importantly, to grow. If they’re looking for help, we want to be the first door they knock on. In addition, we offer Outsmart Disaster training, which focuses on how to mitigate risks associated with natural disasters and recovery avenues available to them. I always say the flagship of our office is our support for the statewide network of Small Business Centers, providing 1:1 business assistance and training for small business owners of all industries and in dozens of languages. In addition, supporting partners that deliver these services–all the federally funded centers like the Small Business Development Centers and the Women’s Business Centers but also Chambers of Commerce and other nonprofits—is a core function of my office. And a big source of pride because we know what a difference they make for their clients.”

What can small business owners expect from meeting with a California Small Business Center advisor?

“Small business owners can expect to meet someone who is fully invested in them. Our Centers cover the full spectrum of business needs, from writing a business plan and obtaining the right permits and licenses, to finding capital, planning a succession strategy and marketing to e-commerce. Our business advisors provide the experience and the objective perspective to help business owners optimize their best assets: ideas, energy, and ability to keep adapting and learning. And they do it because they love helping other people succeed. What’s more, business ownership can become isolating and it may be challenging for entrepreneurs to find assistance. But they don’t have to go at it alone–and they shouldn’t, when these no-cost and low-cost services are available to them.”

What’s the most rewarding part of your role at CalOSBA?

“I always say I have the best job in the state. And it’s because I frequently have the honor to watch someone’s dream come true. I love a ribbon-cutting ceremony–Every time, big or small. It means someone dreamed of accomplishing something and worked hard for it: They opened the doors to their business, they made a sale, and hopefully they will hire their first employee and then it’s off to the races. But no matter what happens to that business, that ribbon-cutting is a milestone they made happen for themselves. There are many other events I get invited to, where you can just see the hope and pride, and even fear in their faces. I’m often overwhelmed by the sheer emotion of it, and I’m always humbled that I get to participate in that person’s big milestone.”

What are some new programs that can benefit small business owners in the Inland Empire?

“The number one question my office gets asked is how to access small business financing. To help address this key need, we’re launching the Technical Assistance for Capital Readiness program this February. The program is part of a bigger effort to fill well-known funding gaps in the state to benefit very small businesses and Socially and Economically Disadvantaged Individuals (SEDI). Through investments from the U.S. Treasury, the State Treasurer’s Office and IBank, the program is going to support lenders to facilitate “high risk” loans that they normally would not approve.

In addition to supporting lenders, my office also received $25.3 million in U.S. Treasury funding to start the new Capital Readiness network. The Capital Readiness Coaches in this network will help business owners get ready for the lending marketplace, help them make the best choices in a high interest-rate environment, and optimize the use of the capital once they receive it. The network is also designed to help spread the word about this opportunity to these SEDI-owned businesses, and some of those partners will be focused on supporting the Inland Empire small business ecosystem.”

How can business owners get in touch with CalOSBA?

“That’s simple! Check out and sign up for our monthly newsletter, where I write a column and showcase success stories from our network, along with deadlines and updates on grant and workforce support programs. We’re also on social media, so I would encourage business owners to check out all of our channels.”

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2024 Banking & Financial Industry Outlook: Where Knowledge Meets Opportunity in California’s Financial Landscape



In an age where financial trends rapidly evolve and economic landscapes shift with increasing unpredictability, the Inland Empire Regional Chamber of Commerce stands as a beacon of knowledge and opportunity. It proudly announces its sold-out annual event, the Financial Industry Update, an exclusive gathering tailor-made for California and the Inland Empire region. This prestigious event is set to unfold on January 18, 2024, at the Ontario International Airport Authority Conference Center, promising an enriching experience for attendees.

A Gathering of Minds in the Financial Sphere

The Financial Industry Update is more than just an event; it’s a crucial nexus for professionals, businesses, and community leaders keen on gaining a deeper understanding of the financial nuances specific to California and the Inland Empire. This year’s event is particularly significant, given the rapid changes and challenges facing the financial sector in the region.

Keynote Speaker: A Treasury of Knowledge

Leading the charge is none other than California State Treasurer Fiona Ma, a figure renowned for her acumen in public finance, economic development, and responsible fiscal management. Her role as the keynote speaker underscores the event’s stature, offering invaluable insights into the financial future of California and the Inland Empire.

Featured Speakers: A Diverse Spectrum of Expertise

Joining Treasurer Ma is a lineup of distinguished speakers, each bringing unique perspectives and expertise:

  • Ivo Tjan: As the Chairman, President, and CEO of CommerceWest Bank, Tjan’s journey from founding the company to leading it through an IPO is nothing short of inspirational. His leadership and insights are eagerly anticipated.
  • Hilda Kennedy: The Founder/President of AmPac CDC and a trailblazer in local government and economic development, Kennedy’s impact on small businesses and community financing is profound.
  • Edward Ornelas, Jr.: The visionary force behind the Inland Empire Regional Chamber of Commerce, Ornelas’s innovative approaches to business and economic development have redefined the region’s business narrative.

Event Highlights: More Than Just Talks

The event promises more than just insightful presentations. It’s a unique opportunity for networking, where professionals can connect, collaborate, and engage with potential partners and influential community figures. The interactive Q&A sessions will allow attendees to delve deeper into subjects, clarifying doubts and gaining more profound knowledge.

A Confluence of Opportunity and Expertise

This event symbolizes the intersection of knowledge and opportunity in California’s dynamic financial landscape. It’s a platform where insights are shared, connections are made, and the future of the financial industry in the Inland Empire is contemplated and shaped.

As January 18 approaches, the anticipation among California’s financial community continues to build. This event is not just a meeting of minds; it’s a forge where the future of financial industry trends and strategies will be hammered out, shaping the economic future of the Inland Empire and beyond.

For more information about the event and the Inland Empire Regional Chamber of Commerce, visit

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