H.R. 4154, the Permanent Estate Tax Relief for Families, Farmers, and Small Business Act of 2009, has been added to the House floor calendar.  The bill would extend the estate tax provisions, due to expire at the end of this year under current law, and allow a $3.5 million estate tax exclusion and a reduction in the maximum estate and gift tax rate to 45% after 2009.  Specifically, it would repeal the provisions of the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA) that eliminate the tax on estates and generation-skipping transfers and the step-up in basis provisions for property acquired from a decedent for estates of decedents dying after 2009. On December 1, House Majority Leader Steny Hoyer (D-MD) told reporters that […]

The Treasury’s “General Explanation of the Administration’s Fiscal Year 2010 Revenue Proposals” (May 11, 2009) includes estate and gift tax-related proposals to • require that the adjusted basis of property received by gift or from a decedent be reported consistently with the values used for transfer tax purposes; • greatly expand the scope of Code Sec. 2704(b) , so that other restrictions on the use or control of the assets in a partnership or other family-owned entity would be ignored in valuing such assets for estate or gift tax purposes; and • require that all GRATs have a term of not less than ten years, effective for trusts created after the date of enactment. The idea concerning the GRATS would be bad news, and is […]

Members of a House and Senate conference negotiating committee have reportedly worked out a compromise resulting in keeping the estate tax at 2009 levels (individuals could exempt $3.5-million from taxes ($7-million for couples), with amounts above that taxed at the present 45 percent rate). This is essentially the House version of the legislation, with the most recent Senate version for inclusion in their budget scenario (as noted in this blog) was for a possible exemption of $5 million per individual and a 35% rate of tax. This is the result which we have been expecting. Of particular interest is that it appears possible that the full House and Senate may vote on the budget blueprint soon. It still appears likely that some additional provisions will […]

S. 722, 111th Cong., 1st Sess. (March 26, 2009), introduced by Senate Finance Committee Chairman Max Baucus (D-Mont.), contains an extensive section on estate tax reform. The bill initially makes permanent many of the provisions of the tax law, including the 10- 25- and 28-percent individual income tax rates, the 15-percent top tax rate and the 5-percent rate for middle- and low-income taxpayers on long-term capital gains and dividends,  and indexes several key exemption levels (such as the alternative minimum tax exemption). Title III of the bill would also: * make the estate, gift, and GST taxes permanent; * reunify the gift tax and estate tax, creating a $3.5 million gift tax exemption; * make permanent the 45-percent top estate, gift, and GST tax rate […]

On April 2, 2009 the Senate voted 51 to 48 to adopt Amendment #873, co-sponsored by Blanch L. Lincoln (D-Ark.) and Jon Kyle (R-Ariz.). The Amendment looks to: (1) Lower the Estate Tax Rate to 35 percent, (2) Raise the Estate Tax Exemption to $5 million, indexed for inflation, (3) Unify the Estate and Gift Tax Credits, and (4) Provide for portability of the Exemptions between spouses. Confusingly, the Amendment does the above “provided that such legislation would not increase the deficit over either the period of the total fiscal years 2009 through 2014, or the period of the total fiscal years 2009 through 2019.” Of Course, we figure that any tax reduction would increase the deficit, so it makes no sense that a bill […]

A footnote in the President’s new budget, “A New Era of Responsibility Renewing America’s Promise,” p. 121, Table S5, fn. 1 (Feb. 26, 2009), is available at http://www.budget.gov. The summary tables at the end of the budget proposal states that the financial results of the budget are calculated presuming, among other things, that the estate taxes are projected to continue through 2019 and that “[i]n continuing the 2001 and 2003 tax cuts, the estate tax is maintained at its 2009 parameters. NOTE This suggests that the President’s fundamental estate tax proposal will be to make the 2009 estate tax rules permanent, with a $3.5 million applicable exclusion amount and GST exemption, $1 million gift tax exclusion amount, a 45 percent tax rate and adjusted basis […]

Introduced in the House of Representatives by Representative Mitchell (D-Ariz..), this would reform the estate and gift taxes permanently. The primary provisions of this bill would * Make the estate and GST taxes permanent; * Make the applicable exclusion amount permanent at $5 million, phased in as follows: … For calendar year 2010, $3,750,000 … For calendar year 2011, $4,000,000 … For calendar year 2012, $4,250,000 … For calendar year 2013, $4,500,000 … For calendar year 2014, $4,750,000 … For calendar year 2015 and thereafter, $5,000,000; * Index the applicable exclusion amount for inflation, after 2015; * Retie the gift tax exemption to the estate tax applicable exclusion amount; * Set the top estate and gift tax rate at the capital gains rate for estates […]

On Feb. 26, 2009, the Obama Administration released a document titled “A New Era of Responsibility: Renewing America’s Promise.” It is the Administration’s preview of its fiscal policies and planned major budgetary initiatives. In effect, it’s an overview of the full FY 2010 budget expected to be released this spring. The document reveals the major tax initiatives that the Administration will push for. These are a combination of revenue-raising “loophole closers” (most of them aimed at businesses), some favorable tax changes for businesses, higher taxes for “higher income individuals,” and tax cuts for other individuals. The tax changes the Administration’s proposes to push for include the following (in each case, the year in parenthesis indicate when the change is proposed to begin): Tax Changes For […]

Huge government expenditures coinciding with precipitous declines in recession era tax receipts are forcing interested prognosticators to look hard at proposals formerly viewed only as long shots, compared to the permanent extension of the 2009 exemptions and tax rates. Overlooked in previous posts was the following: On January 9, 2009 Representative Pomeroy of North Dakota introduced HR 436.  This Bill has been referred to the House Ways and Means Committee. He has introduced such legislation before without success -there are at least four Bills dealing with the estate tax currently pending in the House.  Pomeroy’s  Bill amends the Internal Revenue Code to: (1) provide for an increase to $3.5 million of the estate tax exclusion (eliminating the phase-in period); (2) impose a maximum estate tax […]