Late on February 11, Nancy Pelosi (D-CA), Speaker of the House of Representatives, issued a Fact Sheet carrying a preliminary overview of the Conference Report on the American Recovery and Reinvestment Act. Although it lacks details, it is a valuable overview of the key tax provisions that survived the Conference Agreement on the Stimulus Act. According to Speaker Pelosi, the tax provisions, which make up roughly 35% of the entire stimulus package, include the following: Tax Incentives for Businesses o Extended bonus depreciation and increased expensing for making investments in plants and equipment in 2009. o Longer loss carryback for small businesses, a delay of the 3% withholding tax on payments to businesses that sell goods or services to governments, and a cut in the […]

Based on the Legislation introduced in 2008, we can expect the elimination of the one-year repeal of estate and GST taxes in 2010 (and the imposition of the pre-2001 estate tax regime in 2011).  Stepped-up basis should continue as well.  The election of Obama only reinforces this likely outcome, including: Continuation of the maximum (federal) rate of 45%; Indefinite continuation of the estate tax exemption of $3.5 million now in effect for 2009 (indexed for inflation); Continuation of the $1 million NY exemption; New: easier “portability” of the federal exemption from the pre-deceasing to the surviving spouse. Other proposals are considered more speculative, but have been removed from consideration along with the above, including: Re-integrating the estate and gift tax exemptions to the same amount; […]

Out of the glare of the Presidential election cycle, there have been developments in this area in the U.S. Senate.  The Budget Resolution agreed to by the Senate included an amendment which presumed the law in 2009 to be permanent-this includes a $3.5 million exemption and a 45 percent rate of tax (federal, excluding any state estate tax).  A number of other amendments were rejected, which offered exemptions in the range of $5 million to $7.5 million, and tax rates ranging from 15 to thirty five percent. Beginning in November last year and wrapping up on April 8th, the Senate Finance Committee held three hearings to explore and discuss the estate tax system and reform options, including the problems which are imposed by the uncertain […]

I have taken the comments below from the new edition of Estate Planning Journal, prepared by a connected, Washington D.C. attorney. I think these are reasonable, and represent the current consensus of planners who pay attention: “Whatever the candidates say as to their campaign positions, economic and political realities will come into play when the new President takes office and must work together with Congress. Members of both political parties have an interest in avoiding the 2010-2011 train wreck. The Democrats do not want to allow even one year of repeal; it is very hard to put the genie back into the bottle. The Republicans want to avoid having the exemption return to a $1 million exemption level in 2011. Therefore, the prediction of a […]