Treasury Focus on Complex Basis Rules for 2010 Indicates Probably No Retroactive Estate Tax

In what may be further indication there will probably be no retroactive estate tax passed this year, Treasury is now focusing publically on the complex basis rules affecting estates in 2010.  (Also note that as time goes on–heading into the eighth month already–due process implications of retroactivity loom ever larger.)

Washington Hotline. excerpt: 

While the estate tax is repealed during 2010, under Internal Revenue Code Sec. 1022 there are new and complex rules on basis adjustments. For large estates, a majority of the assets will be transferred with a "flow through" of the basis. That is, the heirs will be able to use the basis of the decedent in any future sales for the purpose of reporting capital gain. Because many decedents have few or no records of the basis, it is quite possible that these heirs will pay capital gains tax on the full value of future sales. However, there are allowances for a basis "step-up" of $1.3 million. In addition, for a surviving spouse, the basis step-up can be $3 million.

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