Estate Tax

[maat55]

For a person dying during 2006, 2007, or 2008, the "applicable exclusion amount" is $2,000,000, so if the sum of the taxable estate plus the "adjusted taxable gifts" made during lifetime equals $2,000,000 or less, there is no federal estate tax to pay. According to the Economic Growth and Tax Relief Reconciliation Act of 2001, the applicable exclusion will increase to $3,500,000 in 2009, the estate tax is repealed in 2010, but then the act "sunsets" in 2011 and the estate tax reappears with an applicable exclusion amount of only $1,000,000 (unless Congress acts before then).


What is up with this? Hey Oprah, you should die in 2010 and pay no estate tax, but in 2011 you will pay 55% on anything over 1 million.

Is the government crazy or just me?

[sweeps]

Politicians aren't stupid. Sunset provisions are a sweet deal. It basically allows them to take credit for eliminating the "death tax" while minimizing the projected cost to the government's budget. Let someone else have to deal with the fallout when the provision expires.

[maat55]

Originally Posted by sweeps

Politicians aren't stupid. Sunset provisions are a sweet deal. It basically allows them to take credit for eliminating the "death tax" while minimizing the projected cost to the government's budget. Let someone else have to deal with the fallout when the provision expires.

It will be interesting to see what Obama's plan for it is. Maybe this is why Oprah is backing him. She will want him to extend the full exemption.

[jIM_Ohio]

Obama would not be likely to extend this lack of tax- democrats typically vote against the estate tax if memory serves me correctly.

Something like 95% of estates are settled for less than $2M, so that is where that number came from.