The post titled Federal Estate Tax in Limbo for 2010 on the OSU Extension Farm Succession Blog provides at least three reasons why the repeal of the federal estate tax might not provide relief for farmers (and ranchers) in 2010:
- Limited step-up in basis. "[T]here will be only a limited step-up in basis." The following reminder from the post is important: "As a reminder, tax liability due to capital gain is not triggered until sale of the appreciated asset."
- Record keeping nightmare. "The Executor will be able to add this extra basis to the existing basis of the property. This means that Executors or heirs will have the added complexity of determining the prior basis of the property, which might go back many years or even generations."
- Uncertainty from retroactivity. "It appears the full repeal of the federal estate tax in 2010 may be very short lived in 2010. Senate Finance Chairman Max Baucus, D-Mont., and House Ways and Means Chairman Charles Rangel, D-N.Y., have said they will try to repeal the repeal and get the federal estate tax reinstated retroactively for 2010 after the New Year. This will cause confusion, uncertainty and possibly very large tax headaches for those families who have someone pass between Jan 1, 2010 and whenever Congress reaches a compromise."