estate tax 2010 repeal
If Estate Tax is repealed for 2010 should it be renamed “murder/suicide incentive law” if it expires in 2010?
Keep in mind, the tax is already scheduled to resume at about 1.5 million dollars for 2011, but presently 2010 is scheduled to be NO estate taxes…most analyses expect for it to be reinstated retroactively for 2010, even if not done until March 2010, waiting for a version to pass both House and Senate.
I find it ironic about Sarah Palin’s patently absurd “death panel” BS, and the present state of the Estate tax, rally is an incentive (potentially) for wackos to kill before end of 2010.
When the Estate Tax resumes in 2011, the exclusion will only be $1 million and the tax rate will rise from 45% to 55%. What most people fail to understand is that under the Estate Tax Law for 2009 which excluded the first $3.5 million and with a tax rate of 45% on anything above that, only about 3% of all estates paid any Estate Tax at all. What most people also don’t realize is that, in 2010, there is no longer a “stepped up basis” on inherited assets. There is now a “carry over” basis. This is the part that is most insidious. If you inherit any thing at all before or after 2010, you receive a stepped up basis on the value of the asset so you don’t pay any Capital Gains Taxes. As an example:
Grandma buys a house for $10K and the house is now valued at $110K. Grandma’s basis cost of the house is what she paid for it, or $10K. In 2009, 2011 or beyond, if Grandma dies and you inherit the house, you get a stepped up basis of the $110 value at her date of death. If you keep or sell the house for $110K, there is no gain so there is no Capital Gains Tax to be paid. Now if Grandma passes in 2010 and you inherit that same house that is now worth $110K you also inherit Grandma’s basis cost of $10K under the carry over basis provision of the law. So you now owe Capital Gains Tax on the $100K difference between Grandma’s basis ($10K) and the new value ($110K). $110K-$10K= $100K gain which is now taxable at the 15% Capital Gains Tax rate. So you now owe $15K in tax. With the Estate Tax, you would owe nothing. This means that any inherited asset that has gained value is now liable for a Capital Gains Tax on that increase in value.
With the Estate Tax, only about 3% of all estates owed any Estate Tax. But 100% of the estates with any assets that have gained value over the years will owe Capital Gains Tax and there is no exclusion of the first $3.5 million like there was under the Estate Tax. So it is ALL subject to taxation under Capital Gains. Not to mention the fact that if you inherit anything, you are going to have to start digging around to find out just how much Grandma or Grandpa paid for everything. Or you will have to pay someone else to research it. This is going to be an absolute nightmare. I have already told my elderly parents that they are not allowed to die in 2010. If they try, we will put them on a ventilator until 2011. Believe me, if people understood this nightmare in the making, they would be storming there Congressional Representative and Senators offices and demanding that they fix this mess.
Tax lawyer Rob Wood discusses 2010 estate tax
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Time to repeal? It’s unclear whether estate tax will be repealed in 2010.(EstatePlanning): An article from: California CPA $9.95 This digital document is an article from California CPA, published by California Society of Certified Public Accountants on March 1, 2009. The length of the article is 1082 words. The page length shown above is based on a typical 300-word page. The article is delivered in HTML format and is available immediately after purchase. You can view it with any web browser.Citation DetailsTitle: Time to re… |
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Post-EGTRRA life insurance planning: the Economic Growth and Tax Relief Reconciliation Act of 2001 promises repeal of the estate tax in 2010, but will … to pass?: An article from: The Tax Adviser $5.95 This digital document is an article from The Tax Adviser, published by American Institute of CPA’s on August 1, 2002. The length of the article is 3945 words. The page length shown above is based on a typical 300-word page. The article is delivered in HTML format and is available in your Amazon.com Digital Locker immediately after purchase. You can view it with any web browser.Citation DetailsTitl… |
