By David Stoyanoff
Congress has passed the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 (the 2010 Tax Relief Act). The 2010 Tax Relief Act extends the Bush-era tax cuts for two years, provides significant estate tax relief, and includes a two-year AMT (Alternative Minimum Tax) "patch" along with other measures meant to stimulate the economy.
Estate Tax Relief
The Bush-era tax law had phased out the estate and generation-skipping transfer taxes, but they were to return to a $1 million and top rate of 55% in 2011. Instead, the 2010 Tax Relief Act:
Income Tax on Inherited Property
Up until 2010, the income tax basis of inherited property could be "stepped-up" to the property's fair market value at the time of the decedent's death. This rule could save heirs substantial income tax when they sold inherited property that had increased substantially in value. Under a lesser known feature of the Bush-era law, for 2010 only, the decedent's income tax basis of the inherited property would carry over to the heirs in many cases. Under the prior law the step-up in basis rules were to return for 2011.
If you would like to learn more about how the changes in the tax law effect your estate plan, or if you do not have an estate plan and would like to know more about the importance of having one, please feel free to contact one of the attorneys at Torus Law, at 804-622-6888 or info@TorusLaw.com.