Article:
Estate Tax Compromise
by Paul H. Roskoph
June 1, 2007
As of the date of this comment there is no Congressional compromise yet in place for the estate tax law. It now appears unlikely that any action will be taken in this session of Congress, but everyone should continue to watch the news. Now that the Democrats have taken control of Congress and no action was taken, we are faced with the 2010 "repeal" of the estate tax and the 2011 reintroduction with only a $1,000,000 exemption. No one in Congress seems to want this reversion to a lesser exemption, so it is likely some change will occur. There may be no action, however, until 2009.
The most recent Committee activity considered seven different alternatives, from total repeal to a $10 million exemption. The only proposal that passed (in Committee) was a retention of a $3.5 million exemption (per decedent) after 2009 – with the retention of the estate tax and "adjusted" ('step-up' or 'step-down') basis similar to current law. If only Congress and the President would pass something so we could plan accordingly.
1. Loss of Charitable Deduction: A recent case of Bruce K. Ney v. Commissioner highlights the importance of following the Regulations to the Internal Revenue Code for charitable deductions. In this case the taxpayers donated land to a qualified conservation charity in Delaware. They failed to obtain a timely appraisal in compliance with the Regulations and the IRS disallowed the deduction in full. The IRS was upheld and the charitable deduction denied by the Tax Court. This is a strong case for attention to details. This was a perfectly valid charitable contribution but not eligible for the deduction for failure to comply with the Regulations. Thus, our "friendlier" IRS still adheres strictly to minutia if details are set forth by the law and regulations.
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