Inheritance Tax after 2010

 Are you asking about a state?  Inheritance tax (a tax levied on the heirs) exists in some states, but most states and Federal only have an estate tax (tax levied on the estate).  See also explanation here: http://www.willsandprobate.com...

Fer decedents dying in 2010, current law has no Federal estate tax, but the step-up in basis is limited to $3.5 million in assets.  For decedents dying in 2011, there's a $1,000,000 exclusion amount and a maximum tax rate of 55%.  I'd lay the odds of that actually being the law by the end of 2011 at approximately zero.

From today's RIA Newsstand Legislative Watch:

A move is underway in Congress to stave off the sunset of the estate tax in 2010 and prevent a wholesale revision of the transfer tax rules in 2011. On October 22, a bipartisan group of House Ways and Means Members (Shelly Berkley (D-NV), Kevin Brady (R-NV), Devin Nunes (R-CA), and Artur Davis (D-AL)), introduced H.R. 3905, the “Estate Tax Relief Act of 2009. ” This measure would repeal both the 2010 one-year termination of the estate tax and the new basis rules, increase the estate and gift tax unified credit beginning in 2010, and coordinate a reduction in the maximum rate of tax (from 45% to 35% over a period of years) with a phaseout of the deduction for State death taxes.
Separately, on October 22, House Ways and Means Committee Chair Charlie Rangel (D-NY) said that he was in the process of drafting language that would make the estate tax permanent. Rangel said that because of the focus on the health reform bill, it was unclear when the bill would come to the House floor. He did say, however, that he didn't expect to unveil his estate tax proposal until after next week's Democratic caucus meeting, at which time he would discuss his proposal with members.
 

That would be nice if something like this proposal comes to fruition.  Anything that keeps the "step-up in basis" rules is fine with me.

I sure agree with Amy. It would be a nightmare trying to figure out basis for most property if we weren't able to go to stepped up basis.

Thanks for your responses.

More important in the long run is the exemption from tax.  Example- Family farm worth 3 mil with only a 1 mil exemption leaving 2 mil at 40% tax mean needed cash of $800,000 due and the family's life is supported by the farm, but now need to sell the farm to pay taxes.  How many family business and estates fall in the 1 to 3.5 million value that will be transferring in the next 10 years.  The step up bases saves on capital gains from the sale but the estate taxes kill there inheritance  and lively hood.

Your family farm is a good candidate for estate planning.  Also, if it will continue to be farmed it can be valued using its special use valuation.

There are some special rules concerning Family businesses and farms for estate taxes. They can defer taxes for 5 years and pay over 10 years - provided the qualifying business (farm) exceeds 35% of the adjusted gross estate.

Phoebe, what do you think will be the results of this tax in 2011.  I know this is more a guess than anything.  Thanks again for you inputs.

I never make any attempt to guess what future legislation may hold.  It's bad enough trying to keep track of the stuff that's actually enacted.