Permanent Federal Estate Tax Repeal: Making a Comeback?

Quick pop quiz: what form of tax do most Americans claim to hate the most? Income taxes? Nope. Payroll taxes? Nope. Tax on alcohol? Tax on cigarettes? Nope and nope. It’s the federal estate tax. That’s a pretty remarkable statement considering that fewer than 2% of Americans are generally subject to the federal estate tax (that number has decreased as the exemption has increased). And yet, it’s still the most hated tax in America. It’s no surprise then that the federal estate tax has again popped up as an election issue. For those of you who aren’t familiar with what’s …

Fix the Tax Code Friday: Tax Cut-a-palooza

This week, Congress has been sparring over the best way to fix the economy. It looks like, one way or the other, we’re going to have some tax cuts. The specifics have yet to be worked out. Many are pushing for individual tax rate cuts while others believe that cutting corporate tax rates (something Speaker Pelosi just indicated she might consider) would kick start the economy much faster. Statistically, however, the federal estate tax remains the least popular tax in the country. Let’s pretend for a second that Congress could only pick one set of cuts to make. And let’s …

Guest Post: PAYGO, the estate tax and the Bush Tax Cuts

This week, I’ve asked readers to chime in on the Bush tax cuts. This guest post is courtesy of Stuart C. Wardlaw, CPA (for more on the topic, see the original post): On January 20, 2009, the Bush Administration handed over not only the keys to the White House; but also a box full of live hand grenades. Two of those grenades have their pins pulled and are set to explode on January 1, 2011, in the form of a resurrection of the Federal Estate Tax and the expiring income 2001 Bush Tax Cuts. As a practical matter, we cannot …

Guest Post: Death to the Estate Tax

This week, I’ve asked readers to chime in on the Bush tax cuts. This guest post is courtesy of Vinny Kochetta (for more on the topic, see the original post): I do not see an ethical basis for the estate/death tax. If a bazillionaire chooses to be frugal and pass his fortune to a child, why should the government take half of that? Even if a half a bazillion is a lot of money… why would this be reduced to a quarter of a bazillion if that child chose to pass on the fortune? This confiscation is morally reprehensible and …

What the Heck is Basis, Anyway?

Last week, I committed a terrible tax blogging sin: I used jargon. I try not to use jargon on my blog. I find it annoying, for one, because who wants to actually sound like a tax attorney (no offense to my esteemed colleagues). But more importantly, what’s the point of reading a blog that you can’t understand? So, I’m making amends with a quick explanatory post about basis. Here’s the context: there’s a current proposal in Congress to reinstate the federal estate tax with a higher personal exemption and a “stepped up” basis for assets. The proposal also includes an …

Are Taxpayers Moving to Avoid More Taxes?

It’s funny, my line of work. I practice tax law alongside my husband who practices international and corporate law. A significant portion of his practice involves business immigration work for companies who are interested in setting up shop here in the US. It’s always interesting to me, then, to read about taxpayers who are interested in renouncing their citizenship for taxes since so many of our clients are desperately trying to get here in the first place. Yet, according to the Financial Times (registration required), that’s what wealthy Americans are doing. The government reports that as many as 743 Americans …

Fix the Tax Code Friday: Federal Estate Tax

This week, the death of George Steinbrenner rekindled discussions about the federal estate tax. As you may be aware, there is no federal estate tax for 2010. However, assuming that Congress doesn’t take action, next year the federal estate tax returns with a personal exemption of $1 million and a flat rate of 55%. Under the current Kyl-Lincoln proposal, the exemption would be increased to $3.5 million (indexed for inflation) with a flat rate of 35%. A prior proposal would have increased the exemption to $10 million. Yet another proposal has suggested a complete repeal. With so many proposals floating …

Federal Estate Tax Gets Some Interest

On July 14, US Senators Blanche Lincoln (D-AR) and Jon Kyl (R-AZ) released a press release with a proposal to “permanently reform the federal estate tax.” Under the current scheme, there is no federal estate tax for 2010 but decedents’ estates for this year are subject to a set of complicated capital gains rules. Beginning in 2011, the personal exemption will revert to $1 million and assets over that amount will be taxed at a flat 55% rate. Under the bipartisan proposal, the exemption would be increased to $5 million phased in over 10 years and indexed for inflation. The …

Trying to Sort Out 2010: Estate Planning

One of my special interests has always been estate planning and the associated tax consequences (if you follow the blog, you may recall that I clerked at the IRS in the estates division). What you may not realize is that you don’t have to be rich to be subject to taxes at death – there are significant income and inheritance taxes that may affect you even if the federal estate tax isn’t applicable. Of course, 2010 is a particularly wacky year for estate planning because of the uncertainty surrounding the federal estate tax. Does that mean that you should lay …