The House of Representatives passed on December 3, 2009, H.R. 4154, introduced by Rep. Pomeroy (D-N.D.). This bill, entitled the “Permanent Estate Tax Relief for Families, Farmers and Small Businesses Act of 2009,” would (a) make the estate, gift, and GST taxes permanent; (b) make permanent the 45-percent top estate, gift, and GST tax rate bracket; (c) make permanent the $3.5 million applicable exclusion amount; and (d) repeal the carryover basis rules and preserve the date-of-death value basis rules. (H.R. 4154, 111th Cong., 1st Sess. (2009))
The bill passed the House of Representatives by a vote of 224-199, and it is likely to be modified in the Senate, where several key Senators are known to favor indexing the applicable exclusion amount and possibly other changes in the current tax rules.
The Will Doctor assumes that any adjustments in the Senate will be helpful, perhaps to phase in a lower rate or a larger ($5mm) exemption equivalent. The chances of a quick resolution of this are uncertain-but: we agree with Mr. Blattmachr and others that if the Congress adjourns in the fall before the election without having passed this remedial and permanent legislation, then the chances of the next Congress doing so (for “political” reasons) are low. Accordingly, we are now assessing strategies designed to take advantage of the window of transfer tax opportunity which would open for a few months before the door closes and we enter the era of a $1 million exemption again in 2011. We will keep you informed.