Is the Pomeroy Bill dead?

BVWireIssue #85-1
BVWireIssue #85-1
October 5, 2009

Will Frazier (HFBE, Dallas) traveled to Washington, D.C. last week for a meeting of the IRSAC (Internal Revenue Service Advisory Committee).  He reports to BVWire that “the only news is that there is no news” on trust and estates legislation.  “I met with some Congressional staffers after my meeting—and Capitol Hill is preoccupied with healthcare…the Pomeroy Bill is dead and not going anywhere. There is no legislation pending that has any valuation discount provisions in it.”

However, this does not mean that any future estate tax legislation will not include these elements,” he adds. “It’s also fairly clear that no permanent estate tax legislation will happen this year. A bill WILL be passed that extends 2009 rules into 2010. So, the ‘death’ tax is NOT going away.” This leaves two unanswered questions. First, will the 2009 estate tax legislation extend for one or two years—giving Congress enough time to enact real estate tax change in either 2010 or 2011? Second—if the extension lasts just one year, will Congress really enact permanent legislation during an election year (2010)?

“If Congress fails to act in 2010, the existing estate tax law will sunset and, in 2011, the estate tax comes back with a vengeance: a 55% rate and a pathetically low $1 million exemption,” Frazier says. “Many on Capitol Hill, including Charles Rangel (D-NY), Chairman of the House Ways & Means Committee—through whose hands all estate tax legislation must pass—would love to see this result.”  Here’s how Frazier handicaps the future:

  • 2009 estate tax law extended through 2010;
  • Estate tax bill passed in 2010, with a 45% max rate, $5 million exemption; and
  • Valuation discounts left alone in 2009, “on the bubble” (or anyone’s guess) in 2010.

“I would not advise placing any bets on my predictions,” he quips. A better bet: there’s still time to attend the 2nd Annual University of San Diego School of Law, Business Valuation and Tax Conference this Friday October 9, 2009.

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