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January 12, 2012 |
Only Days Left To Avoid Estate Tax Problem |
At least one tax form must be filed by January 17 if heirs want to avoid estate taxes for property inherited from people who died in 2010, when there were no federal estate taxes.
If Form 8939 is filed, the basis for property is carried over to heirs and no federal taxes will be owed on the estate. The federal estate tax was reduced to zero in 2010 under a law enacted in 2001, when George W. Bush was president. But that provision, as well as other tax cuts, expired on Jan. 1, 2011. Rather than revert to the 2001 estate tax rate, President Obama and Congress, in December 2010, established a $5 million exemption and a 35 percent rate and extended for two years the 2001 and 2003 income tax cuts.
According to Form 8939, the basis of property inherited in 2010 can't exceed its fair market value on the decedent's date of death.
Form 8939 was the leading point of discussion for a “recent developments” panel at the Heckerling Institute’s 46th Annual conference on estate planning hosted by the University of Miami’s School of Law.
The urgency of filing Form 8939 (announced via an IRS Notice released in September) was just one of the many hiccups in the estate tax law that has kept planners scrambling since the tax act expired in 2010.
A poll conducted of attendees at the conference, many of whom are sophisticated estate planners, indicates expectations are for no congressional action this year for a new estate tax law, especially because it's a presidential election year.
—Tom Kostigen
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Only Days Left To Avoid Estate Tax Problem |
