Monday, October 19, 2009

To Tax Estates or Not? That is the Question!

Under the current tax code in effect right now, the Federal Estate Tax is scheduled to be repealed beginning on January 1, 2010. Under the current law in effect in 2009, a citizen can own up to $3,500,000 in total assets, and pay no Federal Estate tax. And, in Missouri we have no state estate tax either. Anything in excess of that amount is taxed at a current rate of 45%.

We have been thinking that Congress was going to "fix" this and pass a law extending the current Federal Estate Tax for next year. Senate Bill 722 would make the 2009 exempt amount and rate permanent. A House Bill 2032 would make the exemption amount only $2,000,000 and fix the rates for estates between $2M and $5M at 45%; 50% for estates between $5M to $10M and tax estates over $10M at 55%. Another House Bill, No. 436 would use the $3.5M exemption and a top rate of 45%. Meanwhile the Congressional Budget Office has thrown out 4 models for Congress to consider.

The truth is nobody knows what is going to happen? What is apparent is that we are fast approaching deadlock; and, if Congress fails to act before the end of the year, we may begin to see in January the tax equivalent of hell freezing over. Stay tuned. We will bring you the latest as soon as we know what is going to happen!

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