Estate and Generation-Skipping Taxes - Numerous Tax Provisions Expired at End of 2009, Journal Of Accountancy

Numerous Tax Provisions Expired at End of 2009

Journal Of Accountancy *
Numerous Tax Provisions Expired at End of 2009 *
December 31, 2009 *

Excerpts:

The ringing in of the new year at midnight on Dec. 31 also signaled the expiration of several tax provisions. The biggest was the estate and generation-skipping tax regime, which is repealed for 2010. Various bills have been introduced that would revive the estate tax in its 2009 form, but as of Jan. 1 no extension has been enacted, and the estate and generation-skipping taxes, at least temporarily, no longer exist. *

In addition, a number of temporary tax provisions, often referred to as “extenders,” have expired as of Jan. 1. They include tax credits, deductions and various tax incentives. Many of the provisions have been extended several times in the past, and a bill to extend them again is pending in Congress (HR 4213). It passed the House on Dec. 9, 2009, and has been referred to the Senate Finance Committee. *

Estate and Generation-Skipping Taxes ***

In 2001, Congress enacted the Economic Growth and Tax Relief Reconciliation Act (EGTRRA), which resulted in the gradual repeal of the estate and generation-skipping transfer (GST) taxes over the next decade, resulting in no tax in 2010. However, under EGTRRA’s sunset provision, the repeal will be in effect for 2010 only. After that, the estate and GST regime in place before the passage of EGTRRA will spring back to life, as if EGTRRA had never been enacted. This means that in 2011 the estate tax exemption will be $1 million (adjusted for inflation), the tax rate will be 55%, and the state death tax credit will be revived.

EGTRRA also repealed for 2010 the step-up in basis for assets passing at death. Instead, inherited assets are subject to a modified carryover basis rule. Under this new rule, a recipient’s basis in property acquired from a decedent will be the lesser of the adjusted basis of the property at death or its fair market value on the date of death. The carryover basis provision is also scheduled to sunset after 2010.
A number of bills have been introduced that would restore the estate tax. In his budget proposal for fiscal 2010, President Obama proposed keeping the estate and GST tax rules in their 2009 form. The Taxpayer Certainty and Relief Act of 2009, S. 722, introduced in March, would make the estate tax permanent at a 45% top rate and would reunify it with the gift tax by restoring the unified credit at $3.5 million. It would also provide portability of the exemption between spouses. A similar bill, HR 4154, passed the House on Dec. 3.

Expired Tax Credits

Expired Deductions

Other Provisions

Access Full Article: http://www.journalofaccountancy.com/Web/20092459.htm

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http://dreamlearndobecome.blogspot.com This posting was made my Jim Jacobs, President & CEO of Jacobs Executive Advisors. Jim also serves as Leader of Jacobs Advisors' Insurance Practice.