As many predicted, Congress failed to address the repeal of the federal estate tax by the end of 2009. Without such legislation, the tax will be temporarily repealed this year (2010) and restored in 2011 at a rate of 55% on estates valued at $1 million or more, according to the legal tax experts at Wilkie Farr & Gallagher, LLP. As a result, “the automatic ‘step-up’ in basis for property received from a decedent will not be available, and the beneficiaries will instead receive a ‘carry-over’ basis in the property,” with some exceptions.
“The debate over the federal estate tax is expected to continue when Congress returns from recess,” the Wilkie Farr attorneys say. “It has been suggested that any legislation passed in the [coming] year may be made retroactive as of January 1, 2010. Our research indicated that retroactive legislation will likely by upheld as constitutional.”
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