October 23, 2019

ESTATE TAX RULES

Unless Congress changes the law as it stood on January 1, 2010, the estate tax will swing wildly over the next few years.

2009 Rules . . .

  • Estates are taxes at 45% on amounts greater than $3.5 million.
  • The value of assets is reset at the time of death.  That new value serves as the cost basis for figuring capital gains when heirs eventually sell the assets and pay taxes on those gains.

2010 Rules . . .

  • Estates are not taxed.
  • The value of assets is based on prices at which they are acquired by the person who dies.  That value then serves as the cost basis for figuring capital gains when heirs sell the assets and pay taxes (with an exclusion of $1.3 million or up to $4.3 million if the heir is a spouse who is a US citizen).

2011 Rules . . .

  • Estates are taxed at rates ranging from 41% on amounts greater than $1 million to 55% on amounts greater than $3 million.
  • 2009 rules on capital gains return.

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