The most pressing issue for America’s farmers and ranchers in Congress is the prompt passage of legislation to provide estate tax relief, keep capital gains tax rates and extend other important tax provisions that expired at the end of 2009 or are set to expire at the end of 2010, according to American Farm Bureau President Bob Stallman.
“Farm Bureau calls on Congress to act quickly to pass tax legislation when it returns after the election in order to avoid the economic damage that will be caused by tax increases and the uncertainty that surrounds the tax code,” Stallman wrote in a letter to members of the House and Senate Monday.
“For farmers and ranchers, passage of estate tax relief is the single most important tax issue left unresolved by Congress,” Stallman wrote.
“Farm Bureau believes there should be an exemption large enough to exclude farms and ranches from estate taxes and should be indexed for inflation and be transferable to a spouse,” Stallman told lawmakers.
“Farm Bureau supports a $5 million exemption and top rate of 35 percent,” Stallman wrote.
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."