Estate Tax Reform in 2009 Expected

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; […]

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Legislative Proposals and Possible Estate Tax Changes

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 […]

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A new prognostication on tax reform

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 […]

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Tax Statistics: In Focus-Myth and Reality

The following Article is a very useful reference as we frame the context in which we discuss our tax regime, for good and bad: (with thanks to the NY Times) October 31, 2007 Economic Scene Plain Truth About Taxes and Cuts By DAVID LEONHARDT You’re going to hear a lot about taxes over the next two years. Some of the things you hear will be true. Others will be less true. The goal here today is distinguish between the two. Last week, Charles B. Rangel, the Democrat who heads the House Ways and Means Committee, introduced a bill to overhaul the tax code. Above all, it would raise taxes on the affluent to pay for the elimination of the alternative minimum tax, which is hitting […]

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Fall, 2007: New Starting Point for Updates

Circular 230 Disclosure: Pursuant to recently-enacted U.S. Treasury Department Regulations, we are now required to advise you that, unless otherwise expressly indicated, any federal tax advise contained in this communication, including attachments and enclosures, is not intended or written to be used, and may not be used, for the purpose of (i) avoiding tax-related penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any tax-related matters addressed herein. I have started a new blog for hosting my updates, and it seems appropriate, as we are transitioning away from the Bush era -dealing with the reduced chances of actual repeal of our existing unified transfer tax (read Estate, Generation Skipping Transfer, and Gift Tax) regime. As posts will now show, […]

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