Friday, June 3, 2011

Senate Approves Tax Bill, Action Now Moves to House

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On December 15, the Senate by a lopsided 81-19 vote approved the Tax Relief Act of 2010, which includes a two-year extension of the estate tax. Key estate and gift tax elements of the bill include the following:

• a $5.0 million estate tax exemption and a 35% tax rate, effective in 2011 and 2012
• the $5.0 million exemption is portable between spouses during 2011 and 2012
• estates of decedents dying in 2010 may elect between: (i) no estate tax and a carryover basis regime or (ii) an estate tax with a $5.0 million exemption and 35% rate
• for estates of decedents dying in 2010 and before the date of enactment, there is an additional nine months in which to: (i) file an estate tax return, (ii) make estate tax payments, and (iii) make qualified disclaimers of property passing by reason of the decedent's death
• an additional nine months is granted to file a return and make elections for any generation-skipping transfers during 2010 and before the date of enactment
• the gift tax is reunified with the estate tax in 2011 and 2012, with a $5.0 million exemption and 35% tax rate
• the GST tax is reinstated for 2010, at a 0% tax rate.

Action now moves to the House of Representatives, where a significant faction within the Democratic caucus is opposed to the estate tax provisions of the bill. A vote is expected there today or tomorrow.

Harold W. Pskowski, Managing Editor for Estates, Gifts and Trusts

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