Taxes Taxes Taxes
We have been following the debate among the Democrats and the Republicans and the White House over taxes during this lame duck session. Below is a blog from attorney Jeffrey A. Marshal in Pennsylvania, that describes the bill that has been introduced in the Senate by Harry Reid proposing to change the picture for the estate and gift tax in 2011. We could not have said it better, and thank you Mr. Marshall for this description.
Senate Majority Leader Harry Reid has introduced legislation to enact the Obama/Republican tax cut compromise. Entitled the “Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010” the provisions of the legislation can be reviewed through the Senate Democrats website at http://democrats.senate.gov/pdfs/MAT10785.pdf
Section 3.02 of the Reid bill lays out the proposed estate, gift and generation skipping tax rules for 2011 and 2012. These include:
• $5 million dollar exemption per individual
• 35% top tax rate
• Portability of the exemption for married couples. (The unused portion of an individual’s $5 million exemption can pass on to the estate of their surviving spouse.)
• Unified Estate, Gift and Generation Skipping taxation at the $5 million level. For example, if you make a “taxable” gift of $4 million dollars during your lifetime, you will have no immediate tax to pay and will still have $1 million remaining to use to offset estate taxes at your death. (There is no change in the annual exclusion for gifts, which is currently set at $13,000 a year per donor.)
• The $5 million dollar exemption is indexed for inflation, which suggests a possible extension of the rules for 2013 and later years according to an article in the Wall Street Journal.
The Reid bill is structured as an amendment of the current law that was enacted as the Economic Growth and Tax Relief Reconciliation Act (EGTRRA) in 2001. (Title V, Sections 501 et. seq. of EGTRRA dealt with estate, gift, and generation skipping taxes). So, to make sense of the provisions in the current proposal, you may need to refer back to the 2001 law. Here is a link to EGTRRA http://www.irs.gov/pub/irs-utl/egtrra_law.pdf. You will also want to have the Internal Revenue Code handy – it’s available online at this link: http://www.law.cornell.edu/uscode/html/uscode26/usc_sup_01_26.html
According to the Wall Street Journal article, the Senate plans to vote on the bill on Monday.
Jeffrey A. Marshall, CELA*
Marshall, Parker & Associates, LLC
Williamsport, Wilkes-Barre, Scranton, Jersey Shore, PA
visit my blog at http://marshallelder.blogspot.com