Friday, December 18, 2009

Tax Nightmares on the Horizon for 2010

With the government bodies embroiled in the health care debate and trying to get something passed by year’s end, they have failed to enact the proper laws to deal with estate tax issues for 2010.

Several options have been brought up for vote, but none have passed both Houses.

So, this leaves us at least for now with there being no estate tax in 2010- which might be good for the families of a few very wealthy individuals who pass away. However, if this happens, thousands of less wealthy families may pay much more in capital gains tax, as the step up in basis for inherited property goes out the window. Not a good trade off for the average middle class.

Several options have been passed around, such as extending the current rule for another year until they have time to give this more attention, increasing the estate tax exclusion and making it permanent, changing the rates at which it is taxed, etc.

Odds are very good something will be enacted sometime next year and be made retroactive to January 1. This opens up all types of lawsuits for people who pass away before the law is passed and would have benefitted from the ruling in place at the time.

One thing I’m fairly certain of is that this will not end particularly well. I swear we elect some really inept people into government who mess up more than they ever fix. Stay tuned for future updates.

Paula Straub

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