Tuesday, November 10, 2009

Just in from Washington

Bill Russell continues to farm in Emmett, one day he will pass the dairy farm to his son--Ritter photo

Estate Tax Fix in the Works
by Jacqui Fatka, American Agriculturist

Washington--With budgets tight and tables turning on Capitol Hill, what once looked like a friendly environment for a permanent repeal of the estate tax, now looks impossible.

Today the majority of Congressional members no longer support full repeal, and it is likely something will be passed before the end of the year to prevent the one year of repeal from going into effect, tax specialists predict.

Currently, the estate tax - also termed the "death tax" - is set at 45% for estates worth more than $3.5 million (or $7 million for a couple). The President's budget proposed freezing the estate tax at this level so it could be dealt with at a later date.

If Congress does not freeze the tax at this level, the estate tax would be eliminated completely in 2010. However, in 2011, it would revert to pre-2001 tax levels, and estates worth more than $1 million would be taxed at a 55% rate.

If the estate tax law does expire in 2010, estates would also lose the "stepped-up basis," which adjusts the value of property for inflation at death and impact what you pay capital gains on. Pat Wolfe, American Farm Bureau Federation tax specialist, said she expects capital gains will be moved separately from the estate tax.

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