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Strategies & Market Trends : Repeal the Estate Tax? -- Ignore unavailable to you. Want to Upgrade?

To: Labrador who wrote (5)	7/14/2000 7:37:50 AM
From: Labrador	Read Replies (1) \| Respond to of 30

I read this as you are somewhat correct. It appears to me that the step-up is permitted to the extent that the value of the property is under $1.3M, and $3M upon a spouse's death. No step-up over these amounts. And the amounts are adjusted for inflation. Here's the House version. I have printed below the section which repeals the step-up. This is [obviously] only a small portion of the legislative language. CNN,Death Tax Elimination Bill of 2000, As Approved by the House Ways and Means Committee on May 25, 2000. Union Calendar No. 361 106th CONGRESS 2d Session H. R. 8 [Report No. 106-651] 2>To amend the Internal Revenue Code of 1986 to phaseout the estate and gift taxes over a 10-year period. SEC. 103. CARRYOVER BASIS AT DEATH. (a) General Rule.--Part II of subchapter O of chapter 1 (relating to basis rules of general application) is amended by inserting after section 1021 the following new section: 2>"SEC. 1022. CARRYOVER BASIS FOR CERTAIN PROPERTY ACQUIRED FROM A DECEDENT DYING AFTER DECEMBER 31, 2009. "(a) Carryover Basis.--Except as otherwise provided in this section, the basis of carryover basis property in the hands of a person acquiring such property from a decedent shall be determined under section 1015. "(b) Carryover Basis Property Defined.-- "(1) In general.--For purposes of this section, the term `carryover basis property' means any property-- 2>"(A) which is acquired from or passed from a decedent who died after December 31, 2009, and 2>"(B) which is not excluded pursuant to paragraph (2). 2>The property taken into account under subparagraph (A) shall be determined under section 1014(b) without regard to subparagraph (A) of the last sentence of paragraph (9) thereof. "(2) Certain property not carryover basis property.--The term `carryover basis property' does not include-- 2>"(A) any item of gross income in respect of a decedent described in section 691, 2>"(B) property of the decedent to the extent that the aggregate adjusted fair market value of such property does not exceed $1,300,000, and 2>"(C) property which was acquired from the decedent by the surviving spouse of the decedent (and which would be carryover basis property without regard to this subparagraph) but only if the value of such property would have been deductible from the value of the taxable estate of the decedent under section 2056, as in effect on the day before the date of the enactment of the Death Tax Elimination Act of 2000. 2>For purposes of this subsection, the term `adjusted fair market value' means, with respect to any property, fair market value reduced by any indebtedness secured by such property. "(3) Limitation on exception for property acquired by surviving spouse.--The adjusted fair market value of property which is not carryover basis property by reason of paragraph (2)(C) shall not exceed $3,000,000. "(4) Allocation of excepted amounts.--The executor shall allocate the limitations under paragraphs (2)(B) and (3). "(5) Inflation adjustment of excepted amounts.--In the case of decedents dying in a calendar year after 2010, the dollar amounts in paragraphs (2)(B) and (3) shall each be increased by an amount equal to the product of-- "(A) such dollar amount, and 2>"(B) the cost-of-living adjustment determined under section 1(f)(3) for such calendar year, determined by substituting `2009' for `1992' in subparagraph (B) thereof. 2>If any increase determined under the preceding sentence is not a multiple of $10,000, such increase shall be rounded to the nearest multiple of $10,000. "(c) Regulations.--The Secretary shall prescribe such regulations as may be necessary to carry out the purposes of this section.". (b) Miscellaneous Amendments Related To Carryover Basis.-- (1) Capital gain treatment for inherited art work or similar property.-- 2>(A) In general.--Subparagraph (C) of section 1221(a)(3) (defining capital asset) is amended by inserting "(other than by reason of section 1022)"after "is determined". 2>(B) Coordination with section 170.--Paragraph (1) of section 170(e) (relating to certain contributions of ordinary income and capital gain property) is amended by adding at the end the following: "For purposes of this paragraph, the determination of whether property is a capital asset shall be made without regard to the exception contained in section 1221(a)(3)(C) for basis 2>determined under section 1022.". (2) Definition of executor.--Section 7701(a) (relating to definitions) is amended by adding at the end the following: "(47) Executor.--The term `executor' means the executor or administrator of the decedent, or, if there is no executor or administrator appointed, qualified, and acting within the United States, then any person in actual or constructive possession of any property of the decedent.". (3) Clerical amendment.--The table of sections for part II of subchapter O of chapter 1 is amended by adding at the end the following new item: 2>"Sec. 1022. Carryover basis for certain property acquired from a decedent dying after December 31, 2009.". (c) Effective Date.--The amendments made by this section shall apply to estates of decedents dying after December 31, 2009.