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P & T Hot Tip Emailees:

The following may be brought up next week for consideration by the House. It would freeze things just as they are and repeal carryover basis and eliminate the one year hiatus and the resurgence of the $1,000,000 limit in 2011. Nothing fancy here, and likely opposed by both some liberals who might like the lower $1 Million limit and conservatives who want a higher limit and portability. I am unaware of any posted odds on this. It would be very helpful to know what the rules are going to be in 36 days.

My guess is Congress will kick the can down the road with an extension of the 2009 law for a year or 2. A 2 year extension gets them to the non-election year of 2011.

To amend the Internal Revenue Code of 1986 to repeal the new carryover basis rules in order to prevent tax increases and the imposition of compliance burdens on many more estates than would benefit from repeal, to retain the estate tax with a $3,500,000 exemption, and for other purposes.

Mr. POMEROY introduced the following bill; which was referred to the Committee on Ways and Means

To amend the Internal Revenue Code of 1986 to repeal the new carryover basis rules in order to prevent tax increases and the imposition of compliance burdens on many more estates than would benefit from repeal, to retain the estate tax with a $3,500,000 exemption, and for other purposes.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

This Act may be cited as the `Permanent Estate Tax Relief for Families, Farmers, and Small Businesses Act of 2009'.

SEC. 2. RETENTION OF ESTATE TAX; REPEAL OF CARRYOVER BASIS.

(a) In General- Subtitles A and E of title V of the Economic Growth and Tax Relief Reconciliation Act of 2001, and the amendments made by such subtitles, are hereby repealed; and the Internal Revenue Code of 1986 shall be applied as if such subtitles, and amendments, had never been enacted.

(b) Sunset Not To Apply- Section 901 of the Economic Growth and Tax Relief Reconciliation Act of 2001 shall not apply to title V of such Act.

(c) Conforming Amendments-

(1) Sections 511(d) and 521(b)(2) of the Economic Growth and Tax Relief Reconciliation Act of 2001, and the amendments made by such sections, are hereby repealed; and the Internal Revenue Code of 1986 shall be applied as if such sections, and amendments, had never been enacted.

(2) Subsection (c) of section 2511 of the Internal Revenue Code of 1986 is hereby repealed.

SEC. 3. MODIFICATIONS TO ESTATE AND GIFT TAXES.

(a) $3,500,000 Applicable Exclusion Amount- Subsection (c) of section 2010 of the Internal Revenue Code of 1986 (relating to applicable credit amount) is amended by striking all that follows `the applicable exclusion amount' and inserting `. For purposes of the preceding sentence, the applicable exclusion amount is $3,500,000.'.

(b) Freeze Maximum Estate and Gift Tax Rates at 45 Percent- Subsection

(c) of section 2001 of such Code is amended--

(1) by striking paragraph (2),

(2) by striking so much of paragraph (1) as precedes the table contained therein, and

(3) by striking the last 2 items in the table and inserting the following new item:

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`Over $1,500,000 $555,800, plus 45 percent of the excess of such amount over $1,500,000.'.

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(c) Effective Date- The amendments made by this section shall apply to estates of decedents dying, and gifts made, after December 31, 2009.

Please read the important information relating to tax advice at the bottom of this web page.

Best regards,
Bob Wolf, Moderator

“Any tax advice in the foregoing message was not intended or written to be used, and cannot be used by any person for the purpose of avoiding tax penalties that may be imposed with respect to the matters addressed. Some of that advice may have been written to support the promotion or marketing of the transactions or matters addressed within the meaning of IRS Circular 230, in which case, be advised that the advice was written to support the promotion or marketing of the transaction(s) or matter(s) addressed, and you should seek advice based on your particular circumstances from an independent tax advisor.”