2010 Estate and Gift Tax Changes

Here is a detailed Explanation of the Estate and Gift Tax Changes:

2010

Estate Tax

*Basic exclusion amount: $5,000,000 Formerly called applicable exclusion amount
Unified credit: $1,730,800

*Maximum tax rate: 35%
Level where 35% rate begins: $500,000 But no tax until taxable estate + gifts > $5m


* Step-up in basis: Full step-up, unless estate elects out of estate tax

State death tax deduction: Still available on Line 3b (as it was in 2005-2009)

*Due date: No earlier than nine (9) months after date of enactment


*Carryover basis: Applicable only if estate elects out of estate tax

*Max basis increase available: $1.3m (plus $3m for property passing to spouse)

*Due date of new form (8939): No earlier than nine (9) months after date of enactment
Penalty for failure to report to the IRS: $10,000 per failure

Penalty for intentional disregard: 5% of FMV of property
Penalty for failure to report to beneficiaries/donee: $50 per failure

Capital gains tax rate: Proceeds in excess of adjusted tax basis subject to tax at the
applicable capital gains rate when sold (currently 15%).

Gift Tax No change
Exclusion amount: $1,000,000 (no change)
Maximum tax rate: 35% (no change)
Due date: April 18, 2011 (Emancipation Day observed on Friday, April 15, 2011)

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