2010 Estate Tax: Will We Get A Choice?

10:10 am Uncategorized

In a C-Span “Newsmakers” interview that was broadcast last Sunday, Assistant Secretary of the Treasury Michael Mundaca said that “one of the options on the table” in talks with Congress is allowing the estates of people who died in 2010 to be taxed at the 2009 rate.

This would undoubtedly help some heirs now facing capital gains taxes when selling assets who might have been exempt from the estate tax if the owner had died in 2009.  While the heirs of deceased billionaires benefit from the 2010 rules, these rules have subjected beneficiaries of estates worth less than $3.5 million to higher taxes.

This is because 2009 estate tax rules, inherited assets received a full step-up in cost basis – meaning that heirs owed capital gains taxes only on the appreciation of the asset between the time the asset was inherited and when it was sold.  Under this year’s estate tax rules, they owe capital gains taxes on the full appreciation in value from the time the asset was acquired by the owner.

Mundaca said that allowing 2010 heirs to potentially choose 2009 estate tax rates is one option lawmakers are looking at to fill the gap period.  However, he also noted, “We have to work through all this stuff with Congress.”

Contact our California estate planning law firm if you have estate planning “stuff” that you need to work through.

Help is available to you by contacting your Southern California financial planning experts today.

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