Posts filed under ‘Estate Tax Topics’
a note about email
I welcome email contact from folks who read my blog or visit my website. In fact, I generally invite readers to contact me at the end of each blog post if they would like to speak with me directly.
However, I can’t give legal advice via email. If you have an issue that you would like to discuss, feel free to send me a brief email. We can then schedule a time to talk – by phone, Skype or in person – to discuss your issue and how I may be able to assist. Or, you can access our client extranet by making contact HERE, and we will create an account for you. In the extranet, you can request a legal service or ask a legal question, and I will respond promptly.
Please understand that before I can give legal advice or assist you with a legal matter, we must first form an attorney-client relationship. This cannot be accomplished via email communication, but we can create this relationship via our secure client extranet. Until I can obtain certain information from you, I can’t provide legal advice to you in any format. This is a requirement of the ethics rules that govern the practice of law in Tennessee.
IMPORTANT NOTE: PLEASE do not include detailed information in any email communication to me. Email is NOT a secure method of communication and should not be used to share confidential information with anyone.
The information I offer in this blog is general in nature, and may not apply to your specific situation. So, if you have a legal issue (problem, question, etc.), please contact an attorney for assistance. I’m glad to speak with you, or help you find an attorney in your area.
Many thanks for reading my blog!
2010 is here . . . and step-up is now carry-over
The Economic Growth and Tax Relief Reconciliation Act of 2001 covers A LOT of ground and has literally been a moving target for the past nine years. Each year various estate tax-related thresholds have changed, according to the act – one of these is the ‘step-up’ in basis for calculating taxable gain on property inherited upon the death of its owner.
‘Basis’ – as generally applied to property – is the purchase price, and is referred to when calculating the taxable gain upon sale of the property. The greater the gain in value of property, the greater the taxable gain.
In estate tax lingo, the ‘step-up’ in basis permits the value of inherited property to ‘step-up’ to the value of the property at the date of death of the owner.
As of January 1, 2010, the ‘step-up’ calculation is replaced by the ‘carry-over’ calculation. Generally, the premise of ‘carry-over’ in basis requires that the basis of inherited property remains the same as it was for the deceased owner. This has the potential effect of increasing the taxable gain when the property is sold.
When property is inherited in 2010, an heir can choose to take a ‘step-up’ in basis up to $1.3 million; for any amount over this maximum, the heir’s basis will be the smaller of deceased owner’s basis or market value as of date of death. However, a spouse can claim an additional step-up of $3 million, for a total of $4.2 million.
When planning for the proper disposition of your estate, it’s important to understand what the current tax rules are, and how they apply to your property. Since the 2001 Act expires at the end of this year (2010), perhaps these rules will be less of a moving target. But it remains to be seen what Congress will do in this area. So stay tuned, and stay informed.
