FEDERAL ESTATE TAX: CURRENT STATUS
Proposals to repeal the estate tax in the legislative body of the government were apparent in 2009 but Congress was unsuccessful in the termination of the federal estate and generation-skipping transfer (GST) taxes. Consequently, the landscape for the federal estate and GST taxes appears markedly different than it was in 2009, and different from how it is likely to be in 2011. Even though Congress did not reach agreement on the federal estate, GST, and gift taxes in 2009, members of Congress have indicated that congressional consideration of such taxes will be a priority in 2010—and that the legislation will have an effective date retroactive to January 1, 2010. Adding to the uncertainty is the extent to which retroactive legislation, if passed by Congress, would be subject to a constitutional challenge.
Present Status Of Estate, GST And Gift Tax Law - …show more content…
Instead, these assets would be subject to the "modified carryover basis" rules, under which the basis of the estate's assets would be equal to the lesser of the decedent's adjusted basis in the assets or the fair market value of the assets on the date the decedent died. Although the executor of an estate may, generally, allocate up to $1.3 million to increase the basis of an estate's assets and $3 million to increase the basis of estate assets passing to a surviving spouse, these allocation amounts have limited ceilings. Thus, it is possible that the basis of an estate's assets could be stepped down. In 2011, the basis step-up rules applicable prior to 2010 will return.
• For 2010 and 2011, the individual lifetime gift-tax exemption remains unchanged at $1 million. However, for 2010, the maximum federal gift tax rate has decreased to 35 percent. In 2011, the maximum federal gift tax rate will increase to 55
Proposals to repeal the estate tax in the legislative body of the government were apparent in 2009 but Congress was unsuccessful in the termination of the federal estate and generation-skipping transfer (GST) taxes. Consequently, the landscape for the federal estate and GST taxes appears markedly different than it was in 2009, and different from how it is likely to be in 2011. Even though Congress did not reach agreement on the federal estate, GST, and gift taxes in 2009, members of Congress have indicated that congressional consideration of such taxes will be a priority in 2010—and that the legislation will have an effective date retroactive to January 1, 2010. Adding to the uncertainty is the extent to which retroactive legislation, if passed by Congress, would be subject to a constitutional challenge.
Present Status Of Estate, GST And Gift Tax Law - …show more content…
Instead, these assets would be subject to the "modified carryover basis" rules, under which the basis of the estate's assets would be equal to the lesser of the decedent's adjusted basis in the assets or the fair market value of the assets on the date the decedent died. Although the executor of an estate may, generally, allocate up to $1.3 million to increase the basis of an estate's assets and $3 million to increase the basis of estate assets passing to a surviving spouse, these allocation amounts have limited ceilings. Thus, it is possible that the basis of an estate's assets could be stepped down. In 2011, the basis step-up rules applicable prior to 2010 will return.
• For 2010 and 2011, the individual lifetime gift-tax exemption remains unchanged at $1 million. However, for 2010, the maximum federal gift tax rate has decreased to 35 percent. In 2011, the maximum federal gift tax rate will increase to 55