Discussion Archives:Estate Tax 2010

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Discussion Forum Index --> Advanced Tax Questions --> Estate Tax 2010


Discussion Forum Index --> Tax Questions --> Estate Tax 2010

Dustinmoeller (talk|edits) said:

28 January 2010
I have a client that passed away last week and has an estate of approximately $5 million. The attorney for the estate asked about pushing the return through quickly before the repeal of the estate tax is addressed. I am curious what others are doing in this situation. I know the forms have not been updated yet either so prior year forms would need to be used.

Thanks!

TAXBILLY (talk|edits) said:

28 January 2010
I wonder why the attorney thinks that when they do address the problem that it won't be retroactive to January 1.

I could envision a nightmare where an estate is quickly closed, beneficiaries are paid and then the IRS comes a'callin for inheritance tax. I'm sure the beneficiaries wouldn't think of suing, say the tax preparer or the attorney.  :~) taxbilly

Jeff-Ohio (talk|edits) said:

28 January 2010
My best bet is it gets pushed through Congress at the end of the first quarter to mirror 2009 and it is made retroactive to January 1, 2010. Actually, there is no way they will keep it at $0. Not logical.

It'll kill the people who go out a spend the proceeds....

Dennis (talk|edits) said:

28 January 2010
Return? And exactly what form is he planning to use? Seriously, there is a lot of work here because as I recall MN has a sponge tax which means you have to do a traditional 706. Not only do you have to do valuations, but you have to get the data on basis for all assets. You might ask the attorney how he wishes to interpret any tax clause in the will. In any event, Federal requirement currently is allocation of step-up for 1.3 million (and perhaps another 3 million for surviving spouse). We presume a letter to the District Director (or Cincinnati?) will suffice. Alternate valuation becomes an open ended question. Distribution in the face of retroactive federal legislation is potential suicide. We do not feel radioactivity is unconstitutional. They've done it before. We are gathering the data and waiting.

Taxea (talk|edits) said:

28 January 2010
Latest I heard Mr. Rangel made statements to the effect that they are not going to be in a hurry to get this retroactive bill passed. I wouldn't count on it being done in the first quarter...they made comments last December about taking care of it early but, it appears it has been postponed. There are some in Congress that want to raise the limit to 10 million.

Obviously this atty doesn't have a clue about taxes or he would know that the forms will not be available until 2011 and the IRS won't deal with them, at least e-filing, until mid Jan 2011.

Dennis (talk|edits) said:

28 January 2010
Forms are really of no consequence here. So long as you know what the law is you can find a way to comply. Problem under current law, is that there are no Regs. We presume preparer penalties apply to statements of basis.

WIBadgerCPA (talk|edits) said:

28 January 2010
Since the due date for an estate return is 9 months after date of death, I wouldn't wait until January to file these returns.

If they pass something retroactively, hopefully someone will challenge the new law in court. Congress needs to get their act together instead of waiting until the last minute to pass all this crap (Estate law and AMT comes to mind). Changing the law after someone has passed away erodes any confidence that the taxpayers could have in our tax system. If congress would retroactively say that the 15% personal income tax bracket from 2008 is now changed retroactively to 25%,and you would have a huge outcry. But because most taxpayers feel they aren't affected by the estate tax, you hear little.

Death&Taxes (talk|edits) said:

28 January 2010
Problem with non-retroactive is that we would have this period until passage where the new 'stpeped up basis' rules are different so that we might have a different basis depending on whether death occurred before or after reinstatement.....and with that I wonder what happens if nothing is done and in 2011 we revert to 2001.....which step up rules apply then? This was pure cynicism when it passed in 2001 and was pure ostrich thinking in 2009.

CrowJD (talk|edits) said:

28 January 2010
By God, don't railroad these things. I beginning to wonder if this man might have suffered an untimely death....

KatieBrewer (talk|edits) said:

29 January 2010
Unless something has changed, Form #706's still have a 100% desk audit rate. I am sure that the IRS estate auditors are in a holding pattern for 2010 deaths as well as us mere mortals. And even though I can't predict what the law will be changed to, it will be likely (I'd bet some money on it) that the date of death will be the control date for what law to follow, and not the filing date of the darn return. I don't see the rush to file a return due to the extreme uncertainty. And because the IRS has superlien rights when it comes to inherited assets, an early disposition may set up the beneficiaries for some unnecessary heartache, not to mention the liability exposure to the personal representative/executor. And, if the assets are going through probate, I'd be surprised if the probate judge would permit a tax clearance with the level of uncertainty for a 2010 death so early in the year. The attorney should take a chill pill, and this will be a nice post-4/15 project to work on.

Taxea (talk|edits) said:

29 January 2010
This might help...had to research it for my elderly mom:

http://www.journalofaccountancy.com/Web/20102479.htm

Death&Taxes (talk|edits) said:

29 January 2010
Not quite on topic but fascinating

http://www.dailyfinance.com/story/taxes/casey-johnson-and-ruth-lilly-a-tale-of-two-heiresses-tax-looph/19308136/

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