I propose that anytime we discuss current tax code, the phrase 'if I understand it correctly' is implicit. <s>
The points I was looking for, was whether you were the cost basis transferred, how it transferred, and whether it was part of the current tax code. You've answered that, with the latter being, 'Yes'.
I don't think what you're describing is technically, the current tax code for estate taxes. At the time the legislation was signed, it didn't go into effect; there was some schedule for the legislation to go into full effect for 2010, and then is due to expire at the end of 2010. Then, what you're really talking about is the projected tax code in 2010...maybe. Specifically, if we look at: irs.gov, there doesn't seem to be any entry for 'cost basis. [Admittedly, I can't figure out what 'alternate valuation' is, though it doesn't seem to be anything equivelant to 'cost basis'.] Since there is a schedule of reduced inheritance tax which only goes into full affect in 2010. I'm not even sure how one would deal with 'cost basis' being transferred on a percentage basis after the $3.5 million exemption.
Under current law, prior to repeal, the estate or "death" tax drops gradually from a 2001 high of 55 percent to 45 percent, while the amount exempted from tax rises from $1 million today to $3.5 million. Even under the old law, the tax affected a relative handful of the wealthiest estates; in 1999, just under 50,000 estates paid roughly $119 billion in estate taxes, according to IRS statistics.
newsday.com
This is usefull background information.
irs.gov
While you believe that the 'cost basis' transfers, to date, I haven't been able to find anything that supports it.
The for the sake of further discussion, do we assume that the 2010 tax code is extended permanently, or do we assume that it expires, or that it is replaced by something else [See further the AP article above].
Also, I'll tell you that I believe that the saving of small businesses and farms, etc., is a red herring, to appeal to the masses. If the intent was truly to protect those specific estates [which I might call social engineering], then you could easily accomplish that by increasing the exemption to, e.g., $10M. If you want to target farms, that can be done. There's a special reduction in estate taxes for victims of 9-11. On the other hand, if the intent of the Congress is to indefinitely defer the collection of tax advantaged investments [which again I could call social engineering] then the extension of the code in 2010 is the correct approach.
jttmab |
