The Wall Street Journal, citing "an aide close to the discussions," says Congressional taxwriters working on the "framework" for the Obama-Congress tax compromise will not make the 35% estate tax in the plan retroactive to 2010. They will instead allow estates of those dying this year to choose between the 2011 system with the 35% top rate and the $5 million exemption and the 2010 rates.
This choice would be useful for estates between $1.3 million and $5 million. The 2010 system, with no estate tax, only allows estates to step up their basis by $1.3 million; the 2011 system, in contrast, requires taxpayers to adjust the basis of inherited assets to date of death value. If the assets are worth more than they cost to the decedent, this reduces the income tax gain on a later sale of the assets.
Very little news has trickled out on the details since the framework was announced. We will keep you posted, and we will keep updating our "framework" post from Tuesday.
Hat Tip: TaxProf Blog
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