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This post is taken from Google's report of the New York Times article
by Paul Sullivan
Wednesday, January 13, 2010 provided by the
Death and taxes, the adage goes, are the only certainties in life. But when it comes to the combination of the two, the estate tax, there is only uncertainty for 2010.
Most tax advisers thought that Congress would extend the estate tax before it was due to expire at the end of last year. But while the House did act, the Senate did not. So what few predicted would happen did happen: the tax is gone for one year but set to be revived in 2011 at a higher rate and a lower exemption, unless Congress acts. It’s the first time since 1916 that rich Americans can contemplate dying without one last tax.
While many ghoulish jokes have been made about hastening the demise of an old, rich relative, the reality is far more chilling: people who never thought they would pay an estate tax could end up paying capital gains tax instead. The reason is that previous iterations of the estate tax valued the assets at their price on the owner’s date of death and exempted estates up to a certain size from all taxes. In 2009, that level was $3.5 million a person.
But when the estate tax disappeared so, too, did the Internal Revenue Service provision for date-of-death valuations. That means heirs may be responsible for capital gains taxes on any appreciated property when they sell it, forcing them to go back through decades of brokerage statements to calculate the difference between the value of something today and its original price.
Mindful of this, Congress authorized the I.R.S. to issue a stopgap measure exempting the...